Shire of Three Springs
Long Term Financial Plan
2012 - 2022
(Adopted)
Preface
Reliance
The professional advice and opinion in this report has been prepared for the exclusive
use of the Shire of Three Springs and for the purposes specified within this document.
This report is supplied in good faith and reflects the knowledge, expertise and experience
of the engagement consultant and is based on the information and representations
provided by the Shire of Three Springs. We accept no responsibility for any loss
occasioned by any person acting or refraining from action as a result of reliance on the
report, other than the Shire of Three Springs.
Disclaimer
UHY Haines Norton, Perth, a Perth based partnership of trusts (“the Firm”), carries on
business separately and independently from other UHY Haines Norton member firms
around Australia and New Zealand and UHY member firms worldwide.
UHY Haines Norton is a member of Urbach Hacker Young International Limited, a UK
company, and forms part of the international UHY network of legally independent
accounting and consulting firms. UHY is the brand name for the UHY international
network. The services described herein are provided by the Firm and not by UHY or any
other member firm of UHY. Neither UHY nor any member of UHY has any liability for
service provided by other members.
Copyright
© UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
ABN 71 026 896 609
This work is copyright. The Copyright Act 1968 permits fair dealing for study, research,
news reporting, criticism or review. Selected passages, tables or diagrams may be
reproduced for such purposes provided acknowledgment of the source is included.
Shire of Three Springs
If you seek further information or have any questions relating to this Plan please
contact:
The Shire of Three Springs
PO Box 117
Three Springs WA 6519
Ph: 08 9954 1001
Fax: 08 9954 1183
Email: ceo@threesprings.wa.gov.au
www.threesprings.wa.gov.au
Document Management
Version: 5.2.1
Approved by:P Breman
Status: Final
Release Date: 10/07/2012
Date Adopted:18/07/2012
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
2
Contents
Contents
Foreword ..........................................................................................................................................................................................................................................................................................4
Executive Summary ......................................................................................................................................................................................................................................................................5
Introduction .................................................................................................................................................................................................................................................................................... 6
Strategic Planning and Policies ................................................................................................................................................................................................................................................9
Major Assumptions .................................................................................................................................................................................................................................................................... 11
Scenario Modeling ...................................................................................................................................................................................................................................................................... 12
Forecast ..........................................................................................................................................................................................................................................................................................15
Risk Management .......................................................................................................................................................................................................................................................................17
Monitoring and Performance ................................................................................................................................................................................................................................................18
Workforce Planning...................................................................................................................................................................................................................................................................21
Financial Summary .................................................................................................................................................................................................................................................................... 22
Risk, Uncertainties and Sensitivity ...................................................................................................................................................................................................................................... 30
Major Capital Projects...............................................................................................................................................................................................................................................................35
Forecast Statements ..................................................................................................................................................................................................................................................................36
1. Forecast Statement of Comprehensive Income 2012 to 2022 by Nature or Type ..................................................................................................................36
2. Forecast Statement of Comprehensive Income 2012 to 2022 by Program ................................................................................................................................37
3. Forecast Statement of Financial Position 2012 to 2022 .....................................................................................................................................................................38
4. Forecast Statement of Changes in Equity 2012 to 2022.....................................................................................................................................................................39
5. Forecast Statement of Cashflows 2012 to 2022.....................................................................................................................................................................................40
6. Forecast Statement of Funding 2012 to 2022.........................................................................................................................................................................................41
7. Forecast Statement of Net Current Asset Composition 2012 to 2022 ..........................................................................................................................................42
8. Forecast Statement of Fixed Asset Movement2012 to 2022 ............................................................................................................................................................43
Forecast Significant Accounting Policies 2012-22........................................................................................................................................................................................................ 44
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
3
Foreword
Shire President
I am very pleased to present to the
Community the Shire of Three Springs Long
Term Financial Plan for the period 20122022.
The plan is part of the Shire’s ongoing
commitment to an integrated approach to
planning for the District’s future. It provides
the Council and the community with a picture
of the Shire’s long term financial
circumstances and assists us to meet our
strategic outcomes and objectives.
The Shire will encounter many challenges and opportunities over the
next the next 10 years. Changes in population levels and
demographics bring with them changing community needs and
expectations. The Council will require a clear understanding of its
capacity to meet these service expectations as it maintains a strong
focus on sound financial management.
The Council welcomes community participation as we plan for a
promising future of our District. I invite members of the Community to
contact the Council staff or a Councillor if they have any questions.
Regards
Chief Executive Officer
The Shire of Three Springs’s Long Term
Financial Plan is an important financial tool
as we strive to achieve the strategies set out
in the Council’s Strategic Community Plan.
The plan will be used with the corporate
business plan, asset management plans and
workforce plan to achieve our goals and
drive the Shire in achieving its vision of ‘A
healthy and unified community with a bright
future – Powering the region’.
The Shire has recently devoted significant resources into improving its
strategic planning in line with the Integrated Planning and Reporting
Framework. We have also investigated ways to improve services to
the Community by resource sharing and collaboration with
neighbouring local governments in line with the State reform agenda
for local government. This work continues as we constantly seek to
improve our systems and service delivery.
The staff have worked closely with the Council to prepare this plan
and to highlight the financial issues that will require decisions in the
future. I thank the staff for their effort in producing this
comprehensive document.
Best Wishes
Annie Treloar
Shire President
Grant Middleton
Chief Executive Officer
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
4
Executive Summary
Planning for a Sustainable
Future
The Shire of Three Springs is planning for a
positive and sustainable future. The Shire
seeks to maintain, and where possible,
improve service levels into the future while
maintaining a healthy financial position.
Financial Summary
Operations
The plan predicts a positive net result from
operations throughout the period. This is
achieved with the inclusion of external
grants and contributions for specific capital
projects. This source of funds is vital,
without it the Shire would record a negative
net result for each of the years.
Rates
Rates revenue is forecast to increase by 4%
per annum based on the current population
levels.
Grants
Grants and contributions for operations are
expected to be $0.98m in year one and then
increase by 4% per annum. Capital Grants
are forecast to be $1.62m in year one and
decrease to $0.83m in year 5 before steadily
increasing to $1.00m by year ten.
Financing
Strategic Financial Issues
Reserves are forecast to increase from
$0.49m to $0.74m over the 10 years while
borrowings will reduce from $0.94m to
$0.15m. This will place the Shire in a strong
financial position at the end of the forecast
period.
Assumptions
The plan has been prepared based on the
following broad assumptions:
 The Shire will maintain its current
service levels and, where financial
prudent, increase services.
 The level of grants and contributions for
capital projects and operations will
remain relatively stable over the term.
 The District and State economy will
remain stable.
 No major changes in the level of services
are expected over the life of the Plan.
The Shire has responsibility for the
maintenance of a large asset base including
a significant part of the District’s road
network. To undertake this task the Shire
receives substantial external grants from
the National and State Government. Without
this source of revenue the Shire would be
faced with the prospect of a substantial rate
increase and/or a significant reduction in
service levels.
Major Projects
Council does not have an extensive capital
expansion program with resources being
utilised primarily for the maintenance and
renewal of assets.
The upgrade of the Sports Ground facilities
and Swimming Pool have been included in
the plan as the principal expansion projects
over the term.
Assets are expected to be adequately
maintained and continue to provide existing
levels of service. The Shire has agreed to
participate in the current local government
reform process with surrounding Shires.
The impacts of this process on methods of
delivery of services are currently unknown
and the impact of any change have not been
considered within this plan.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
5
Introduction
Planning Framework
Community
This Long Term Financial Plan has been
prepared to achieve compliance with the
Local
Government
(Administration)
Regulations 1996.
Development of the plan has also been
influenced by the Department of Local
Governments Framework and Guidelines for
Long Term Financial Planning.
Background Statistics
The Shire of Three Springs is located in the
Midwest Wheatbelt and neighbours the
Shires of Irwin, Mingenew, Morawa,
Carnamah and Coorow.
Key Statistics: Shire of Three Springs 2012
Three Springs is a strong farming
community situated within the wildflower
region and turns into a mass of colour when
the warmth of spring arrives. The
community has a long history of producing
high quality agricultural output using
progressive farming techniques.
The estimated resident population has
increased marginally over the past five
years. Three Springs’s small town
atmosphere
and
safe
community
environment are well regarded by its
residents. Many sporting and recreation
facilities are available to the residents in
their leisure time to foster this community
spirit.
Graph 1
Number of Elected Members
Number of Staff
Annual revenue
Rates revenue
Number of Electors
Number of Dwellings
Distance from Perth (km)
Area (sq. km)
Population (Est.)
7
25
4.8 m
1.3m
492
373
313
1,927
700
It is important the Shire retains services
and infrastructure to continue to sustain
these highly valued social qualities.
When compared to the State population
average, the Shire has a substantially lower
percentage of young adults aged 15-24 and
a higher percentage of residents aged 25-34
and 55-64. This elderly population brings an
increased demand for aged and health
services. The Shire seeks to be recognised
as a friendly community and regional leader
in the provision of health and medical
services with the aim of meeting future
demands and help maintain the district
population.
Shire of Three Springs Resident Population by Age Group
25.0% 23.0%
20.0%
17.2%
15.0%
14.3%
13.5%
15.2%
10.0%
5.0%
6.6%
6.6%
3.0%
0.7%
0.0%
0
10
20
30
40
Data Source: Australian Bureau of Statistics 2010
50
60
70
WA
80
Three Springs
90
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
6
Introduction
Service Programs
The Shire provides a wide variety of
services to the community. The following
service program descriptions are used in
the plan to represent these services.
Governance – Activities and facilities to
support elected members (councillors) in
their governance role and Council functions.
General Purpose Funding – Activities
associated with levying and collecting rates,
general purpose grants and interest on
investments.
Law, Order and Public Safety – Services
principally associated with the Shire
Rangers. This includes administration and
implementation of various local laws,
animal control (licensing and enforcement),
fire prevention and emergency services.
Health – The operation of child health
clinics
and
immunisation
services,
monitoring of food quality and licensing of
food premises and pest control measures
Community Amenities – The operations
of waste services (rubbish collection,
disposal and recycling), town planning and
development and urban storm water
drainage functions.
Recreation
and Culture – The
maintenance of halls, Indoor Sports and
Aquatic Centre, various sports grounds,
ovals, parks and reserves throughout the
district. The operation and maintenance of
the two libraries and a heritage centre is
also included.
Transport – Maintenance of streets, roads,
bridges, parking areas and footpaths
including street cleaning and lighting of
streets. Activities associated with operation
of the works depot are also included.
Economic Services – Building control
Other Property and Services – Work
undertaken by the Shire for external
customers. Operating costs for Shire’s plant
and equipment. Labour overheads for works
and services. Administration Overheads and
all other activities.
No services are expected to cease or be the
subject of major modification over the term
of the plan.
Nature or Type
A number of statements in the plan are
disclosed using nature or type of descriptors
of revenue and expenditure (for example
Rates and Employee Costs).
This classification is in accordance with
Schedule 1 of the Local Government
(Financial Management) Regulation 1996.
services (licences), support for the local
tourist centre, area promotion and
economic development initiatives under
taken by the Shire.
Education and Welfare – Activities for
the operation of day care centre and preschools, senior citizens’ centre and meals on
wheels services.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
7
Introduction
Financial Statements
The following forecast financial statements
have been prepared and are included at the
end of the Plan.
These forecast statements have been
prepared within a framework which accords
with the Australia Accounting Standards.
Statements of Comprehensive Income
Often referred to as the operating
statement, it shows the revenues and
expenses over the periods classified by two
methods (by Program and Nature or Type)
to disclose a net result.
Review
Statement of Funding
A statement combining operating and
capital revenues and expenses and discloses
the opening and closing net current budget
surplus (deficit) funding position for each
year.
The plan will be revised annually and take
into account any changes to the to the
Shire’s Strategic Community Plan, Corporate
Business Plan or other informing plans such
as the workforce plan or asset management
plans.
Statement of Movement in Fixed Assets
A summary of the impact of the plan on the
value of fixed assets over the period. It
discloses the movements in the net value of
property, plant, and equipment and
infrastructure.
Statement of Financial Position
More widely referred to as the Balance
Sheet, this statement discloses the forecast
changes in the balance of assets and liability
accounts over the periods.
Statement of Changes in Equity
This statement discloses the changes in
equity over the forecast period. It shows the
impact of operations on net assets and the
movement in cash backed and revaluation
reserves.
Statement of Cash flows
Represents the forecast cash inflows and
outflows and discloses the changes to the
balance of cash over the period.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
8
Strategic Planning and Policies
troduction
Linkage with other Plans
Strategic Community Plan structure
The Long Term Financial Plan is one
component of a number of integrated
strategic planning practices the Shire has
developed, or is developing, in response to
the Department of Local Government’s
Integrated
Planning
and
Reporting
Framework.
This plan includes, and influences, other
strategic planning activities as a mechanism
to action the strategies contained in Shire’s
Community Strategic Plan. The plan links to
other Strategic documents as follows.
Corporate Business Plan
The Corporate Business Plan contains
details of the actions and resources (human
and financial) to achieve each strategy. It is
a rolling 4 years plan which acts as an
organisational guide to the Council and
management.
Community Vision
and Aspirations
Strategic Objectives
Strategic Ourcomes
Strategic Outcomes
Strategies
Strategies
Strategies
Strategies
Strategic Community Plan
The Council’s current Strategic Community
Plan was put out for public comment
following the March 2012 Council meeting
for a period of 21 days.
A Strategic Community plan has been
prepared to cover at least the next 10 years
and sets out the community’s goals,
aspirations and values. To achieve these
goals a series of outcomes and strategies
were developed. Many strategies may be
required to achieve a single outcome and
many outcomes needed to achieve a single
objective as represented in the diagram to
follow.
The individual strategies all require actions
that may require additional human and
physical resources. In addition, achieving
these strategies may require a series of
actions over time as they may not be able to
be achieved concurrently taking into
account limited financial resources.
To achieve the Shire’s strategic outcomes
requires careful operational planning and
prioritisation. This planning process is
formalised as a Corporate Business Plan
which operates on a rolling 4 years basis.
The financial capacity to undertake these
tasks is evidenced in the long term
financial plan for the period. This long
term financial planning provides an
assurance the actions contained in the
Corporate Business Plan can be adequately
resources over the next 4 years and
highlight the long term consequences of the
application of human and financial resource
to undertaking various projects.
The first year of the 2013-14 Corporate
Business Plan will be ‘sliced off’ to form the
draft annual budget for consideration by the
Council.
Forward Capital Works Plan
The Shire has developed a five year forward
capital works plan. This forward capital
works plan incorporates expenditure
estimates for the main asset classes and is
an information source for the capital
program as set out in this plan.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
9
Strategic Planning and Policies
troduction
Linkage with other Plans
(cont.)
Workforce Planning
Other Plans
Relevant Council Policies
A workforce plan is to be developed to set
out the level of human resources required to
achieve the actions contained in the
Corporate Business Plan and the requisite
skills, training, qualifications expertise.
A 10 Year plant replacement program has
been developed and as part of the long term
financial planning process and provides the
plant replacement input into this Plan.
Council currently does not have any formal
policies regarding long term financial
planning, borrowings or asset renewal
priorities.
The financial impact of the current level of
human resources has been incorporated
into this long term financial plan.
Asset Management Planning
Major Variations in Service Levels
The Shire of Three Springs does not have
any plans, or envisages the need, to
significantly vary the level of services
provided to the community over the life of
this plan.
The Shire of Three Springs is to develop
formal asset management plans for the
following asset classes:
- Transport Infrastructure;
- Buildings;
- Plant and Equipment; and
- Parks and Gardens.
In addition to setting service standards for
these assets, the plans contain work
schedules that apply financial resources to
the renewal of assets over the next 10+
years.
These renewal schedules would generally
influence the Shire’s Forward Capital Works
Plan which in turn be used as a basis for
forecasting capital expenditure.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
10
Major Assumptions
troduction
Major Assumptions
The following is a summary of the major
assumptions relevant to the development of
this Plan. Full details of all assumptions are
presented later in the plan.
The
forecast
financial
information
presented should be read in conjunction
with all assumptions to gain an
understanding of the limitations of the
financial forecasts.
Inflation Forecasts
The WALGA economic briefing issued in
January 2012 forecasts CPI to increase
through 2012/13 including an increase
associated with the introduction of the
Carbon Tax in July 2012.
The higher than average levels of wages and
construction costs in the local government
industry are forecast by WALGA to result in
the Local Government Cost index increasing
to 4.0% in the year ended June 2013.
Current economic instability makes
estimation of inflation over the longer term
difficult. The current forecast level of 4% is
viewed as appropriate as it is within the
Reserve Bank of Australia target level and is
in line with recent historical movements.
Interest Rate Movements
Current borrowings are based on fixed
interest rates and will not be affected by
market movements in interest rates over
the life of the plan.
Future borrowings have been based on an
interest rate of 6.50% which is above the
rates currently offered by WA Treasury but
is in line with rates on other borrowings.
Interest rates on investments have been
forecast at 5% in line with current term
deposit rates offered by major banking
institutions. Movements in this rate will
have minimal impact on the operating cash
position however interest earnings on cash
backed Reserves would be directly impacted
by a major variation to this assumption.
Population Movements
The estimated resident district population
of 700 has been stable for a number of
years. Recent anecdotal evidence and
reducing accommodation vacancy rates
suggests populations in the region have
increased marginally in the past year due to
mining activity. The Council has, through its
Strategic Community Plan, set the desired
outcome of “Managed population growth
across a range of demographics, particularly
aged and families.”
In line with recent trends a stable
population level has been assumed in this
plan
General Economic Forecasts for State
and Region
The economic forecast for the State and
Region is closely linked the success of the
mining industry and demand for minerals.
Historically, the region’s economy is heavily
dependent on agriculture and this remains
the assumption for the term of this Plan.
Developments in broadacre farming and
consolidation have resulted in declining
populations within the region. This decline
has recently been reversed due to mining
activity which is forecast to remain strong.
The development of a deep water port at
Oakajee is forecast to further increase
mining activity within the region and State.
Service Levels and Delivery
In order to manage population growth
across the range of demographics current
service levels are forecast to be maintained,
and where finances permit, increased in
relation to services that support health and
aged service.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
11
Scenario Modeling
Scenario Modeling
Scenario modeling was undertaken by
applying varying assumptions as part of the
consideration of the possible alternative
outcomes and potential for financial
variation.
These scenarios were developed to test the
financial impact of applying a pessimistic
approach (Low); moderate approach
(Medium); and an optimistic (High) level
approach to revenues, expenditure and
asset development.
Details of the assumptions used in each
scenario are presented in the following
pages and a summary of the impact of each
scenario on the Shire’s financial position
summarised below:
Low Scenario
A significant decrease in operating grant
funding after the first year, combined with
an increase in employee and borrowing
costs resulting in a decrease in operating
surpluses.
A decrease in non operating grants after the
initial four years resulting in an annual
increase in Written Down Value (WDV) of
infrastructure of 5.1% decreasing in second
half of plan to 2.1%
A new loan borrowing of $700,000 to fund
capital works and plant replacement
Reserve levels were forecast to remain
largely unchanged from current levels.
Medium Scenario
Operating grants are forecast to return to
historical levels in year one increasing by
inflation thereafter. Operating expenditure
is forecast to continue to grow in line with
inflation.
Non-operating grants are forecast to remain
at current levels in line with the Forward
Capital Works Plan decreasing thereafter to
historical levels with a corresponding
decrease in capital upgrades.
No new borrowings to fund capital works or
plant replacement.
Reserve levels were forecast to increase by
$288k from the current level over the ten
years.
High Scenario
Under this scenario, rates are forecast to
increase by 3% above inflation with
operating and non-operating grants
continuing at current levels. Operating
expenditure is forecast to remain in line
with inflation.
The WDV of infrastructure levels are
forecast to increase annually 9.6%
decreasing in second half of plan to 5.9% in
line with non-operating grant levels.
Reserve levels were forecast to increase by
$2.2m over the ten years from current
levels.
Selected Scenario
The Shire selected the Medium Scenario as
having the characteristics that best reflect
the likely future events.
Sensitivity Analysis
Where it has been assessed a high level of
uncertainty applies to the assumption
outcomes, sensitivity analysis has been used
to help quantify the potential financial
impact of a change in the assumption.
Those assumptions with a high level of
uncertainty and a higher dollar value
present the greatest risk a movement will
result in unexpected and detrimental
consequence. Refer to the section Risks,
Uncertainties and Sensitivity, for details of
this analysis adjacent to each assumption.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
12
Scenario Modeling
Revenue Scenarios
Disclosure
District Growth in Rates:
Assumed level Scenario One
Low
0% per annum increase in population.
Assumed level Scenario Two
Medium (Selected)
0% per annum increase in population.
Rates Level Increase:
Rates increase in line with inflation.
Rates increase in line with inflation.
Operating Grants and
Contributions:
Decrease in historical levels in year one.
Subsequent years increase by inflation only.
Non-Operating Grants and
Contributions:
Capital Grants per Forward Capital Works
Plan for initial four years. Level
subsequently decreases to align with
historical levels.
Increase in line with forecast inflation.
No service charges anticipated.
Investment rate of 5.0 % per annum.
Increase in line with forecast inflation.
Nil predicted.
Decrease to historical levels in year
one. Subsequent years increase by
inflation only.
Capital Grants per Forward Capital
Works Plan for initial four years. Level
decreasing in year five to
approximately $0.83m.
Increase in line with forecast inflation.
No service charges anticipated.
Investment rate of 5.0 % per annum.
Increase in line with forecast inflation.
Nil predicted.
Fees and Charges:
Service Charges
Interest Earnings
Other Revenue
Profit on Asset Disposal:
Assumed level Scenario Three
High
3% per annum increase in population
with minimal impact on total rates.
Rates increase 3% above inflation. No
change in discounts allowed.
Increase by inflation from base level.
Level remains approximately in line
with base year.
Increase in line with forecast inflation.
No service charges anticipated.
Investment rate of 5.0 % per annum.
Increase in line with forecast inflation.
Nil predicted.
Expenditure Scenarios
Employee Costs:
Materials and Contracts:
Utilities
Depreciation:
Interest Expense:
Insurance:
Other Expenditure
Loss on Asset Disposal:
Doctor’s costs increase by 2% above
inflation for five years. Works crew costs
increase by 2% above inflation for three
years. Medical Staff costs increase by 1%
above inflation for five years.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
In line with base depreciation rates.
Existing borrowings will continue at
existing interest rates. 6.50% per annum on
future new borrowings.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
Nil predicted.
In line with inflation.
In line with inflation.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
In line with base depreciation rates.
Existing borrowings will continue at
existing interest rates.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
In line with base depreciation rates.
Existing borrowings will continue at
existing interest rates.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
Nil predicted.
Increase in line with forecast inflation.
Increase in line with forecast inflation.
Nil predicted.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
13
Scenario Modeling
Assets Scenarios
Disclosure
Revaluations:
Impairment of Assets:
Infrastructure Assets:
Property Plant and Equipment:
Assumed level Scenario One
Low
Nil predicted.
Nil predicted.
Low level of capital grant funding
resulting in an annual increase in WDV
of infrastructure of 5.1% decreasing in
second half of plan to 2.1%
High increase in PPE for initial two
years to $7m which will be maintained
for balance of plan.
Assumed level Scenario Two
Medium (Selected)
Nil predicted.
Nil predicted.
Medium level of capital grant funding
resulting in an average annual
increase in WDV of infrastructure of
2.36%
High increase in PPE for initial four
years to $7.5m which will be
maintained for balance of plan.
Assumed level Scenario Three
High
Nil predicted.
Nil predicted.
High level of capital grant funding
resulting in an annual increase in WDV
of infrastructure of 9.6% decreasing in
second half of plan to 5.9%
High increase in PPE for initial two
years to $7.6m which will increase at a
medium level for balance of plan to
$9.1m.
Borrowings of $700,000 taken up in
year two to fund PPE additions.
Nil movement predicted.
No new borrowings.
No new borrowings.
Nil movement predicted.
Nil movement predicted.
Minor fluctuations in Cash Backed
Reserve levels throughout plan.
Reserve levels largely unchanged at
end of ten year period. Interest reinvested in Reserves.
Nil movement predicted.
Increase of $0.29m in Cash Backed
Reserve levels through the ten years of
the plan. Interest re-invested in
Reserves.
Increase of $2.2m in Cash Backed
Reserve levels through the ten years of
the plan. Interest re-invested in
Reserves.
Nil movement predicted.
Nil movement predicted.
Nil predicted changes.
4.0% Per Annum for life of Plan
Nil impact considered as impact
unable to be determined.
Nil predicted.
Nil predicted changes.
4.0% Per Annum for life of Plan
Nil impact considered as impact
unable to be determined.
Nil predicted.
Nil predicted changes.
4.0% Per Annum for life of Plan
Nil impact considered as impact
unable to be determined.
Nil predicted.
Liability Scenarios
Borrowings:
Employee Entitlements:
Equity Scenarios
Cash Backed Reserves:
Revaluation Reserves:
Other Scenarios
Ownership of Strategic Assets:
Inflators:
Carbon Tax:
Commercial Activities:
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
14
Forecasts
Revenue Forecasts
The Shire’s revenue sources are heavily
dependent on external grants to support
operations and capital investment (50% in
2012-13). This revenue source is outside
the Council’s direct sphere of influence
which adds inherent uncertainty to the
revenue forecasts.
General Rates
Rate revenue represents the Shire’s greatest
discretionary revenue source and is forecast
to increase steadily using an inflator of 4%
per year.
No new specified area rates or differential
rates are expected to be created over the life
of this plan.
Projected movement
Amount(%) 2012-13
Amount(%) 2021-22
4.00% /annum
$1.46m (28%)
$2.08m (34%)
Untied Grants
Untied Grants are those provided without
specific restriction on their use and the
Shire can decide where any untied grant
funding is expended. An example of untied
grants is the annual financial assistance
grants allocated by the the WA Local
Government Grants Commission (WALGGC).
In 2012-13 the estimated amount of untied
grants was $620,470 which represents 12%
of total revenue for 2012-13.
Untied grants are forecast to increase from
the base at a rate of 4% per annum. It is not
possible to be certain in relation to this
forecast at present as the WALGGC are
concluding a grant allocation methodology
review which may impact on the Shire’s
allocation in the short to medium term.
Projected movement
Amount(%) 2012-13
Amount(%) 2021-22
4.00% /annum
$620,470 (12%)
$783,155 (13%)
Capital Grants and Contributions
Grants and contributions received to fund
specific capital works are forecast to reduce
in amount and proportion over the life of
the plan. This is a conservative forecast and
results from the difficulty in predicting the
level of these grants. As they are for a
specific purpose, they do not always impact
directly on the Shire’s operational capacity
except for the Shire’s capacity to maintain a
stable workforce.
Movement
Amount(%) 2012-13
Amount(%) 2021-22
Yearly estimate
$1,62m (31%)
$1.01m (16%)
Fees and Charges
A fee or a charge is the recovery of cost for
goods or services provided by the Shire.
The level of a fee or charge must be
restricted to its cost in specific
circumstances (mainly for access to
information) but otherwise is not limited.
The exception being non-discretionary fees
and charges set by external bodies (such as
planning fees). To maintain relativity, it is
generally assumed fees and charges will
follow a similar inflator as expenses.
Projected movement
Amount(%) 2012-13
Amount(%) 2021-22
4.00% /annum
$1.08m (21%)
$1.54m (25%)
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
15
Forecasts
Expenditure Forecasts
The largest single expenditure category for
the Shire is employee costs. The Shire
employs staff and a workforce to deliver
services to the community and maintain
public assets.
Employee Costs
Employee costs are forecast to increase in
line with inflation during the term. The
Shire is of the opinion future levels of
service will be able to be provided by
current staffing levels.
Projected movement
Amount(%) 2012-13
Amount(%) 2021-22
4.00%/annum
$1.63m (41%)
$2.32m (43%)
Materials and Contracts
Materials and contracts are forecast to
increase in line with inflation with any
savings from moving towards a planned
asset maintenance program being offset by
increased maintenance requirements from
new assets.
Projected movement
Amount(%) 2012-13
Amount(%) 2021-22
4.00%/annum
$0.96m (24%)
$1.36m (25%)
Depreciation
Depreciation is the systematic allocation of
the value of assets purchased in the past for
as long as the Shire holds the asset. It is not
a cash payment but it is often used as a
proxy for level of asset depletion. The
straight line depreciation method is
assumed in the forecasts using average
depreciation rates applied to the closing
value of fixed assets at the end of each
forecast period.
Amount(%) 2012-13
Amount(%) 2021-22
$0.75m (19%)
$0.93m (17%)
Interest
For existing loans the interest expense has
been calculated based in the actual
debenture interest schedules for each loan.
No new loans are forecast to be required.
Forecast Assumptions
Full details of the major assumptions
relevant to this plan are detailed later in the
document under the heading of ‘Risks,
Uncertainties and Sensitivity’.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
16
Risk Management
Risk Management
The Shire provides a diverse range of
services and facilities to the general public
which exposes it to risks. As part of the
implementation of Integrated Planning and
Reporting the Shire intends to formalise its
risk based management practices to
improve the management of identified risks.
The Shire has a practice of conducting a
regular review of insurance levels of its
assets by the Chief Executive Officer and
staff to ensure the level is adequate to
protect the Shire’s assets. The Shire’s
insurer is LGIS.
Certainty of Assumptions
The Shire has included a detailed analysis of
the assumptions used in the preparation of
this plan and the level of risk associated
with each assumption.
The impact of the assumptions on issues
that are identified as carrying a high risk
have been separately disclosed as has the
sensitivity of movements in these
assumptions on the financial forecasts set
out in this plan.
Recent amendments to applicable Financial
Management Regulations requires the
investment of surplus funds (including cash
reserves) to be in Term Deposits held by
Authorised Deposit taking Institutions
based or Treasury Bonds
The Shire seeks to engage experienced and
qualified personnel in areas of high risk and
provides them with appropriate ongoing
training and equipment to ensure they are
able to undertake their roles with minimal
risk to the Community and the Shire.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
17
Monitoring
and Performance
Monitoring and Perfomracnce
Monitoring
Graph 2
The plan will be the subject of a desktop
review in May each year to take into account
changing circumstances and a full revision is
scheduled every two years with the next
review being May 2014.
450.00%
Monitoring of the Shire’s financial rigidity
and financial position is undertaken by
preparing and monitoring various ratios.
250.00%
Scenario 1 - Low
200.00%
Scenario 2 - Medium
150.00%
Scenario 3 - High
Performance Assessment
A series of performance indicators in the
form of financial ratios have been calculated
for the selected scenario.
To maintain comparability across the
Industry these ratios and their respective
target ranges have been derived from the
Department of Local Government’s Model
Long Term Financial Plan (June 2011).
Selected key ratios from the three scenarios
are provided adjacent to demonstrate the
variation within each scenario.
Full details of these financial ratios are
presented on the following page together
with an assessment of the impact of the
ratio on the Shire’s future financial position.
Scenario Comparison – Asset Sustainability Ratio
400.00%
350.00%
300.00%
100.00%
50.00%
0.00%
2013
Graph 3
2014
2015
2016
2017
2018
2019
2020
2021
2022
Scenario Comparison – Operating Surplus Ratio
30.00%
25.00%
20.00%
15.00%
Scenario 1 - Low
10.00%
5.00%
Scenario 2 - Medium
0.00%
-5.00%
Scenario 3 - High
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
-10.00%
-15.00%
-20.00%
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
18
Monitoring
and Performance
Monitoring and Perfomracnce
Ratio
Current Ratio:
Indication
A measure of the
Shires immediate
liquidity and the
capacity to meet
short term
financial
obligations from
unrestricted
current assets.
Target/
Average
%
Yr 1
%
Yr 2
%
Yr 3
%
Yr 4
%
Yr 5
%
Yr 6
%
Yr 7
%
Yr 8
%
Yr 9
%
Yr 10
> 100%
acceptable
Ave. 92%
87.5
88.3
87.8
87.4
93.5
93.2
94.2
97.0
97.0
96.9
Commentary: While the ratio is below the target the trend is for improvement toward a 100%. The ratios is not considered to indicate a threat the Shire’s long term
financial position.
> 0%
Operating Surplus Ratio
The extent to
acceptable
which revenues
>15% Ideal
raised cover
(13.4)
(13.0)
(12.5)
(12.1)
(11.6)
(10.7)
(9.3)
(8.9)
(8.7)
(8.5)
Ave. (10.9)
operational
expenses.
Commentary: While the ratio is below the target the trend is for improvement toward 0.0. The ratios is not considered to indicate a threat the Shire’s long term financial
position due to the inclusion of depreciation in the operating result
Own Source Revenue
Coverage Ratio
The Shire’s ability
to cover costs
using only
discretionary
revenue.
>60%
acceptable
>90% Ideal
Ave. 67.0
65.9
66.1
66.2
66.4
66.6
67.0
67.6
67.8
67.9
68.0
Commentary: The ratio is in the acceptable range and improving over time indicating a reasonable ability to continue to operate in the event of a sudden loss of grant
and other revenue.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
19
Monitoring
and Performance
Monitoring and Perfomracnce
Ratio
Debt Service Cover Ratio
Indication
The Shire’s
capacity to
generate
sufficient cash to
cover debt
payments.
Target/
Average
>2%
acceptable
>5% Ideal
%
Yr 1
2.2
%
Yr 2
2.3
%
Yr 3
2.6
%
Yr 4
2.8
%
Yr 5
%
Yr 6
%
Yr 7
%
Yr 8
%
Yr 9
%
Yr 10
2.9
6.8
7.0
9.5
30.6
31.8
146.1
165.9
191.6
198.7
170.0
202.7
Ave. 9.9
Commentary: The ratio improves as existing borrowings are paid off and the operating result improves.
>90%
Asset Sustainability
The extent to
acceptable
Ratio
which assets
>110% Ideal
managed by the
Ave. 173
Shire are being
171.0
140.0
191.8
152.2
replaced as they
reach the end of
their useful lives.
Commentary: Whilst the ratio is above the ideal range limited reliance should be placed on the ratio dues to the lack of asset management and related data.
Asset Consumption Ratio
The aged
condition of the
Shire’s physical
assets.
n/a
n/a
n/a
n/a
n/a
Commentary: The lack of accurate asset management data results in an inability to calculate this ratio.
n/a = not available due to a lack of values
Asset Renewal Funding
The Shire’s
Ratio
financial capacity
to fund asset
renewal to
n/a
n/a
n/a
n/a
n/a
support existing
service levels.
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Commentary: The lack of accurate asset management data results in an inability to calculate this ratio.
NPV = Net Present Value, n/a = not available due to a lack of values.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
20
Workforce Planning
Workforce Planning
The Shire currently employs 21 Full Time
Equivalent (FTE) employees to deliver the
range of services to the community and to
maintain existing assets.
No additional staffing resources beyond
the 2010/2011 level have been modelled
into the Long Term Financial Plan.
Council encourages work life balance, multi
skilling, flexibility and effective application
of staff capability.
Council’s workforce strategies include:
 Attracting and retaining quality staff
members;
 Building a healthy and safer workplace;
 Developing a comprehensive workforce
plan; and
 Rewarding successes.
$ Millions
Currently the Shire has no formal Workforce
Plan but one is in the process of
development.
Graph 4
Forecast Employee Costs
3
2
2
1
1
Change in Employee Costs
Employee costs are forecast to increase over
the life of the plan in line with inflation as
reflected in the adjacent graph.
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Employee costs
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
21
Financial Summary
Graph 5 plots the operating revenues and
expenses over the periods as columns and
the net result (revenues less expenses) as a
line.
The Shire expects to record a positive
operating net result for the life of the plan
moving from $1.27m in 2012-13 to $0.69m
in 2021-22. Recording a positive net result
over the period suggests the Shire is
progressively adding to its asset base.
While projecting a steady increase in
operating expenses over the period the level
of grants and contributions for capital
projects results in variations in the net
result particularly in the first four years.
It should be noted, without the grants and
contributions for capital projects the Shire
would record a negative operating result for
each forecast year, commencing in 2012-13
with negative $0.351m.
The Shire is also heavily reliant on receiving
over $620k in untied federal government
grants to maintain the current level of
operations and services.
Graph 5
Millions
Operations
Forecast Comprehensive Income
7
6
5
4
3
2
1
0
2012-13
2013-14
2014-15
2015-16
Total revenue
2016-17
2017-18
Expenses
2018-19
2019-20
2020-21
2021-22
Net Result
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
22
Financial Summary
Revenue Proportions
Graph 6 shows the change in the proportion
of operating revenue items over the term of
the plan.
Graph 6
Forecast Operating Revenue
100%
There is a forecast trend for a decreasing
level of revenue from grants and
contributions for specific capital projects.
This trend reflects the uncertainty
surrounding the future and extent of
royalties for regions funding and a
conservative approach to forecast levels of
road funding.
90%
80%
70%
60%
As the proportion of capital grants reduces
untied grants and contributions remain
readily constant as does fees and charges,
interest and other revenue. This results in
rates representing a higher proportion of
the revenue moving from 28% in year one
to 34% in year 10.
50%
40%
30%
20%
10%
0%
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Rates
28%
28%
30%
30%
34%
34%
34%
34%
34%
34%
Operating grants, subsidies and contributions
19%
19%
20%
20%
23%
23%
23%
23%
23%
23%
Fees and charges
21%
21%
22%
23%
25%
25%
25%
25%
25%
25%
Service charges
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Interest earnings
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
Other revenue
0%
0%
1%
1%
1%
1%
1%
1%
1%
1%
Non-Operating grants, subsidies and contributions
31%
30%
25%
24%
16%
16%
16%
16%
16%
16%
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
23
Financial Summary
Rates Revenue
Operating Grants
Grants and contribution for operating
purposes are planned to increase from
$0.98 m in 2012-13 to $1.40m in 2021-22.
The assumption is for a 4% increase
annually over the period resulting in a
steady progression of revenue.
There is a high level of uncertainty in
relation to this forecast as the actual level of
grants allocation has not been determined
and is subject to the amount of Federal
funds allocated to W.A. and the allocation
methodology adopted by the WALGGC.
Graph 7
$ Millions
Rate revenue is forecast to increase with an
inflator of 4% per annum. Rates are
expected to generate $1.46m in 2012-13
increasing to $2.08m in 2021-22.
Forecast Revenue
6
5
4
3
2
Capital Grants
Grants and contribution for specific capital
projects are expected to be high for the first
half of the plan period and then reduce. This
results from the current revenue from
royalties for regions program. As with
operating grants the level of grant revenue
has not been determined over the forecast
period.
1
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Operating revenue
Operating grants, subsidies and contributions
Rates
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
24
Financial Summary
Expenses Proportions
The graph adjacent shows the change in the
proportion of operating expenditure items
over the term of the plan.
Graph 8
Forecast Operating Expenditure
100%
The components of operating expenditure
are expected to remain relatively stable
over the period.
90%
80%
The principal movements relate to changes
in interest expense which is impacted by the
term of existing borrowings reducing as
principal is repaid and loans finish.
70%
60%
Employee costs and materials and contracts
remain the dominate operating expenditure
components making up just over 41% and
24% of the costs respectively. The
proportion of these components remain
stable over life of the plan.
50%
40%
30%
20%
10%
0%
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Employee costs
41%
41%
41%
41%
42%
42%
42%
42%
42%
43%
Materials and contracts
24%
24%
24%
24%
24%
25%
25%
25%
25%
25%
Utility charges (electricity, gas, water etc.)
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
Depreciation on non-current assets
19%
19%
19%
19%
18%
18%
17%
17%
17%
17%
Interest expense
1%
1%
1%
1%
1%
0%
0%
0%
0%
0%
Insurance expense
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
Other expenditure
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
25
Financial Summary
Capital Works
The overwhelming majority of the capital
expenditure during the forecast period is
expended on roads infrastructure.
Graph 9
Forecast 10 Yr Capital Expenditure
This
proportion
of
expenditure
demonstrates the clear priority the Shire
has for maintaining its most substantial
asset, the road asset network. Over the
period the Shire will spend $16.9m on
assets with $9.9m of this being on Roads.
14%
Also represented in the capital spending mix
are buildings and plant and equipment and
to a lesser extent parks and gardens.
Roads
Roads
Parks and Gardens
Footpaths and Cycleways
Buildings
Plant and Equipment
Total
$9,918,499
$550,000
$600,000
$3,511,616
$2,329,000
$16,909,115
21%
Parks and Gardens
Footpaths and Cycleways
59%
Buildings
Plant and Equipment
3%
3%
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
26
Financial Summary
Graph 10
Asset Renewal
In the first 4 years of the plan there is a mix
of capital renewal and new assets. This mix
changes to be a renewal focus in the last 6
years.
In the absence of completed asset
management plans for each class of asset
the renewal needs of the district are not
formally identified.
$ Millions
Capital Trends
Forecast Capital Expenditure
3
2
2
New or expanded assets
The Shire is planning for a major expansion
of the Swimming Pool facilities in 2012-14
and also an expansion of buildings at the
Town Recreation Oval. These projects are
represented in the graph under the heading
of ‘PPE expansion, upgrade and new’
This level of capital spending occurs against
a backdrop of reducing borrowings and
increasing cash reserve balances. This
provides the Shire with the capacity to
borrow or use reserves in the future for
unplanned major capital projects.
1
1
0
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
PPE renewal
PPE expansion, upgrade and new
Infrastructure renewal
Infrastructure expansion, upgrade and new
Borrowings
Non-Operating grants, subsidies and contributions
Reserves
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
27
Financial Summary
Financing
Borrowings
The principal outstanding on borrowings
reduces significantly over the life of the plan
with only the swimming pool loan
remaining after year 10.
As existing loans come to an end no new
borrowings
have
been
specifically
identified. This provides the Shire with
increasing capacity to borrow in reaction to
unplanned events or urgent issues over the
life of the plan.
Cash Reserves
The balance of cash reserves are forecast to
increase over the term of the plan. The
majority of the movement relates to the
Plant Reserve which is expected to increase
from $300k in 2012-13 to $469k in 202122. The dips in closing balances in the
middle and later years are the result of
transfers out of the Roadworks Reserve to
fund road renewals.
$ Amount
In general, the finances of the Shire are
expected to improve over the term with a
reduction in the level of borrowings
outstanding and an increase in cash savings
in the form of reserves as represented in the
adjacent graph 11.
Graph 11
Forecast Borrowings and Reserves
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Reserves
Borrowings
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
28
Financial Summary
Financial Rigidity
Financial Sustainability
Over the life of the plan the Shire seeks to
maintain a balanced funding budget while
reducing debt and increasing cash reserves.
The Shire, through self assessment and after
considering the financial trends (as
presented in the ratios), considers it
exhibits financial sustainability over the life
of the plan.
Generally, the Shire is very reliant on
external grants and contributions and
would find it difficult to compensate for
large negative movements in grants through
alternate discretionary revenue sources
such as rates.
Historically, the Shire has consistently
received external support in the form of
grants and contributions for capital projects,
particularly roads works. Although these
grants have been consistently allocated,
they do vary in the amount received.
Due to the relationship between the three
levels of government, it would be
reasonable to assume these grants will
continue regardless of the lack of a clear
documented long term commitment from
the funding bodies. Regardless, the
uncertainty surrounding the level of grants
and contributions both untied and capital
adds risk to long term financial planning
outcomes.
The Shire holds the expectation it will
maintain services commensurate with the
communities expectations and needs in the
future without these demand resulting in a
financial shock or excessive changes to its
current rating policy.
Over the life of the plan the fixed asset ratios
are well above the target ranges. This would
suggest the Shire is maintaining its asset
base. There are a number of new capital
building projects in the first three years of
the plan however there is a shortage of
detail in medium to long term demand
analysis and asset management planning.
This makes identifying the renewal needs of
assets (particularly buildings) and the
timing of this work unclear in the outer
years.
The plan sets out increasing reserve levels
and reducing borrowings. This increasing
financial capacity offers a buffer to any
currently unplanned renewal works and in
the absence of detailed asset management
plans.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
29
Risks, Uncertainties and Sensitivity
Revenue Risks, Uncertainties and Sensitivity.
Assumption/Disclosure
Assessed
Financial
Risk
Impact for
High Financial Risk Assumptions
Level of
Uncertainty
Financial impact and sensitivity for
assumption with high
level of uncertainty
District Growth in Rates: The number of
residents in the Shire is expected to grow each
year by 3% as more dwellings are constructed.
Medium
The level of population growth and development
activity is difficult to forecast and carries a high
level of uncertainty.
High
Rates ± $14,632 in the first year of
the plan.
Not applicable.
Medium
Per 1% movement in the growth
rate.(Assumes a linear relationship
between rates and population)
Not applicable.
The road maintenance program and general
operations of the Shire are dependent on levels of
Federal Financial Assistance Grants. Changes in
the levels of these grants would impact directly on
the Shire’s ability to meet projected service levels.
The Capital works program is highly dependent on
Government grants and contributions. Changes in
these levels would impact directly on the amount
spent on capital projects and ultimately impact on
service levels.
Not applicable.
Medium
± $118,008
Low
Low
Low
Rates Level Increase: Annual rates have been
based on increases in line with the forecast
inflation of 4% per annum.
Operating
Grants
and
Contributions:
Decreased to historical levels in year one and
increased by inflation in subsequent years.
Medium
Non-Operating Grants and Contributions:
Adjusted from the based year by inflation then
reduced to 1.5m in year five to and increased by
inflation for the subsequent years.
High
Fees and Charges: Increases are based on
expected cost increases assumed to be sufficient
for funding purposes. These will be reviewed
annually.
Interest Earnings: Interest earning of an
average rate of 5.0% per annum
Other Revenue: Increases in line with inflation.
Profit on Asset Disposal: Profit on asset
disposal results from a mis-allocation of
depreciation over the life of the asset. As the
level of depreciation is considered appropriate
no profit on asset disposals has been included.
Medium
High
to the value of operating grants and
contributions per 1% movement in
the value over the life of the plan.
Medium
± $113,127
Medium
to the value of non-operating
grants and contributions per 1%
movement in the value over the life
of the plan.
Not applicable.
Not applicable.
Medium
Not applicable.
Not applicable.
Not applicable.
Low
Low
Not applicable.
Not applicable.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
30
Risks, Uncertainties and Sensitivity
Expenditure Risks, Uncertainties and Sensitivity.
Assumption/Disclosure
Assessed
Financial
Risk
Employee Costs: The increase in salaries is
influenced by ongoing organisational efficiencies
and the current Workforce Plan which is
summarised in this document. Base year
increased in line with inflation.
Materials and Contracts: Base year increased
in line with inflation.
Medium
Utilities: Base year increased in line with
inflation.
Depreciation: Depreciation has been calculated
using an average depreciation rate based on
historical depreciation rates.
Insurance: Base year increased in line with
inflation.
Other Expenditure: Base year increased in line
with inflation.
Loss on Asset Disposal: A loss on asset disposal
results from a mis-allocation of depreciation
over the life of the asset. As the level of
depreciation is considered appropriate in the
plan no loss on asset disposals has been included
in the plan.
Medium
High
Impact for
High Financial Risk Assumptions
Not applicable.
Level of
Uncertainty
Low
The road maintenance program and general
operations of the Shire are dependent on levels
of Federal Financial Assistance Grants. Changes
in the levels of these grants would impact
directly on the Shire’s ability to meet projected
service levels.
Not applicable.
Medium
Financial impact and sensitivity for
assumption with high
level of uncertainty
Not applicable.
± $114,970
to the value of materials and
contracts per 1% movement in the
value over the life of the plan.
Medium
Not applicable.
Low
Not applicable.
Low
Not applicable.
Medium
Not applicable.
Medium
Not applicable.
Medium
Not applicable.
Medium
Not applicable.
Low
Not applicable.
Low
Not applicable.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
31
Risks, Uncertainties and Sensitivity
Asset Risks, Uncertainties and Sensitivity.
Assumption/Disclosure
Assessed
Financial
Risk
Impact for
High Financial Risk Assumptions
Level of
Uncertainty
Revaluations: No revaluation of assets has been
assumed over the life of the plan.
Low
The revaluation of assets to their fair value may
result in changes in asset ratio analysis and
depreciations leading to a change in the net
result. The revaluation of assets will have no
impact on Cashflows.
High
There is a proposal by the State Government to
require asset to be valued at fair value in
accordance with the Australian Accounting
Standards.
Impairment of Assets: No impairment of assets
has been assumed over the life of the plan.
Impairment of assets usually occurs due to
unplanned or unforseen events such as natural
disasters.
Infrastructure Assets: Renewals, additions and
replacements of infrastructure assets is highly
dependent on the level of capital grant funding
received.
High
A widespread major impairment event may
result in a requirement for high levels of
expenditure to maintain service levels.
Medium
High
High
Property Plant and Equipment: Land and
Building Renewals, additions and replacements
are highly dependent on the level of capital
grant funding available. Plant and equipment
replacements influenced by Plant Replacement
Program
Medium
The Capital works program is highly dependent
on Government grants and contributions.
Changes in these levels would impact directly on
the amount spent on capital projects and
ultimately on service levels.
Not assessed as high financial risk as the
frequency of capital grants for buildings is not as
pervasive as roadworks and plant and
equipment replacement is not influenced boy
external grant funds.
Medium
Financial impact and sensitivity for
assumption with high
level of uncertainty
± $75,199
to the value of property plant and
equipment per 1% movement in
the value over the life of the plan.
± $257,358
to the value of infrastructure assets
per 1% movement in the value
over the life of the plan.
Unable to be quantified.
± $113,127
to the value of infrastructure assets
per 1% movement in the capital
grants received over the life of the
plan.
Not applicable.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
32
Risks, Uncertainties and Sensitivity
Liability Risks, Uncertainties and Sensitivity.
Assumption/Disclosure
Assessed
Financial
Risk
Borrowings: it has been assumed the Shire is
able to secure, on an ongoing basis, borrowings
and will make repayments in accordance with
the current debenture schedules.
High
Employee Entitlements: It has been assumed
the Shire will be in a position to meet its
obligations in relation to employee entitlements.
Medium
Impact for
High Financial Risk Assumptions
If the Shire is not able to secure borrowings in
the future the likely impact will be the
cancellation or postponement of related asset
acquisitions leading to a reduction in service
levels over the short to medium term.
Not applicable.
Level of
Uncertainty
Financial impact and sensitivity for
assumption with high
level of uncertainty
Low
Not applicable.
Low
Not applicable.
Equity Risks, Uncertainties and Sensitivity.
Assumption/Disclosure
Assessed
Financial
Risk
Cash Backed Reserves:
It has been assumed the Shire will invest cash
reserves in term deposits with banking
institutions and these funds will be available for
use during the term of the Plan.
Revaluation Reserves:
No revaluation of
assets has been assumed over the life of the
plan.
Low
Not applicable.
Low
The revaluation of assets to their fair value may
result in changes in asset ratio analysis and
depreciations leading to a change in the net
result. The revaluation of assets will have no
impact on Cashflows.
There is a proposal by the State Government to
require asset to be valued at fair value in
accordance with the Australian Accounting
Standards. This may result in a requirement to
revalue asset classes in the future.
Impact for
High Financial Risk Assumptions
Level of
Uncertainty
Medium
High
Financial impact and sensitivity for
assumption with high
level of uncertainty
Not applicable.
± $75,199
to the value of property plant and
equipment per 1% movement in
the value over the life of the plan.
± $257,358
to the value of infrastructure assets
per 1% movement in the value
over the life of the plan.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
33
Risks, Uncertainties and Sensitivity
Other Assumptions
Assumption/Disclosure
Assessed
Financial
Risk
Impact for
High Financial Risk Assumptions
Level of
Uncertainty
Ownership of Strategic Assets: The Shire has
not planned for the ownership of any strategic
assets to be transferred to another party over
the term of the plan. The likelihood of receiving
vested roads from subdivision activity is
assumed as to be low.
Inflators: Inflation factors have been applied to
both revenue and expenditure throughout the
plan. These inflators have been derived from
management judgment and using available
external information sources such as the
WALGA local government costs index.
High
Any significant changes to the ownership of
strategic assets would require an amendment to
this Plan and depending on the circumstance be
subject to community consultation.
Low
Not applicable.
Not applicable.
High
± $2,820,845
to operating revenue per 1%
movement in the inflators over the
life of the plan.
Carbon Tax: No allowance has been made for
the impact of the Federal Governments Carbon
Tax. It is assumed the Shire will not be required
to pay the tax directly.
Commercial Activities: The Shire has no plans
to undertake a significant commercial activity
during the period of the Plan.
Medium
Low
Not applicable.
High
Medium
Not applicable.
Low
Financial impact and sensitivity for
assumption with high
level of uncertainty
± $2,226,691
to operating expenditure per 1%
movement in the inflators over the
life of the plan.
The Shire is unable to be
determined at present as the
impact will largely be indirect.
Not applicable.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
34
Major Capital Projects
Major Projects
Description
Swimming Pool Facility Expansion
Oval Building Expansion
Roadworks Renewal
Funding Source
$
Projects Benefits and Risks
Est. project
Costs
$
Timing
33% General
Revenue, 66%
grant funding
General Revenue
Reduced future swimming pool maintenance costs and a
continuity of services.
900,000
2012-14
Improve the level of service to the community from the
oval building.
Renewal of road infrastructure to ensure current level of
service is maintained.
Renewal of building infrastructure to ensure current
level of service is maintained.
Renewal of parks and ovals infrastructure to ensure
current level of service is maintained.
650,000
2013-14
16,814,657
2012-22
1,340,400
2012-22
350,000
2012-22
Buildings Renewal
General Revenue,
and grant funding
General Revenue,
Footpaths Renewal
General Revenue,
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
35
Statement 1 - Forecast Statement of Comprehensive Income 2012 to 2022
– by Nature or Type
Revenues
Rates
Operating grants, subsidies and contributions
Fees and charges
Service charges
Interest earnings
Other revenue
2009-10
$
2010-11
$
1,130,560
1,128,499
856,555
0
63,333
30,708
3,209,655
Base
$
1,259,358
1,125,321
1,117,159
0
75,879
22,762
3,600,479
2012-13
$
1,407,551
1,695,192
1,040,657
0
74,297
24,550
4,242,247
2013-14
$
1,463,853
982,900
1,082,283
0
79,577
25,532
3,634,145
2014-15
$
1,522,407
1,022,217
1,125,575
0
81,225
26,554
3,777,978
2015-16
$
1,583,305
1,063,106
1,170,596
0
82,240
27,616
3,926,863
2016-17
$
1,646,637
1,105,628
1,217,418
0
87,053
28,721
4,085,457
2017-18
$
1,712,502
1,149,853
1,266,115
0
88,361
29,871
4,246,702
2018-19
$
1,781,001
1,195,846
1,316,759
0
87,009
31,067
4,411,682
2019-20
$
1,852,241
1,243,681
1,369,428
0
88,525
32,310
4,586,185
2020-21
$
1,926,331
1,293,429
1,424,206
0
93,582
33,602
4,771,150
2021-22
$
2,003,384
1,345,168
1,481,178
0
92,296
34,946
4,956,972
2,083,520
1,398,973
1,540,426
0
95,756
36,344
5,155,019
Expenses
Employee costs
Materials and contracts
Utility charges (electricity, gas, water etc.)
Depreciation on non-current assets
Interest expense
Insurance expense
Other expenditure
Non-Operating grants, subsidies and
contributions
Profit on disposal of assets
Loss on asset disposal
NET RESULT
Other Comprehensive Income
TOTAL COMPREHENSIVE INCOME
( 1,185,924) ( 1,287,420) ( 1,572,388)
( 961,273) ( 1,026,774) ( 920,765)
( 88,671) ( 129,575) ( 123,300)
( 679,010) ( 734,462) ( 711,649)
( 26,070)
( 33,786)
( 27,400)
( 101,143) ( 114,817) ( 149,831)
( 29,311)
( 44,241) ( 298,071)
( 3,071,402) ( 3,371,075) ( 3,803,404)
138,253
229,404
438,843
( 1,635,284) ( 1,700,693) ( 1,768,720) ( 1,839,468) ( 1,913,041) ( 1,989,560) ( 2,069,139) ( 2,151,905) ( 2,237,982) ( 2,327,501)
( 957,595) ( 995,903) ( 1,035,742) ( 1,077,169) ( 1,120,256) ( 1,165,061) ( 1,211,662) ( 1,260,124) ( 1,310,532) ( 1,362,945)
( 128,232) ( 133,360) ( 138,695) ( 144,241) ( 150,009) ( 156,010) ( 162,249) ( 168,740) ( 175,489) ( 182,508)
( 742,539) ( 769,405) ( 795,151) ( 823,713) ( 848,744) ( 858,498) ( 847,724) ( 873,559) ( 898,095) ( 928,345)
( 56,034)
( 48,142)
( 40,154)
( 32,805)
( 25,054)
( 18,125)
( 14,622)
( 11,156)
( 8,845)
( 8,283)
( 155,824) ( 162,056) ( 168,536) ( 175,276) ( 182,284) ( 189,575) ( 197,156) ( 205,043) ( 213,245) ( 221,776)
( 309,993) ( 322,395) ( 335,291) ( 348,705) ( 362,653) ( 377,158) ( 392,243) ( 407,932) ( 424,250) ( 441,218)
( 3,985,501) ( 4,131,954) ( 4,282,289) ( 4,441,377) ( 4,602,041) ( 4,753,987) ( 4,894,795) ( 5,078,459) ( 5,268,438) ( 5,472,576)
( 351,356) ( 353,976) ( 355,426) ( 355,920) ( 355,339) ( 342,305) ( 308,610) ( 307,309) ( 311,466) ( 317,557)
626,350
508,361
2,410,039
1,623,726
1,604,240
1,283,656
1,314,249
827,201
860,289
894,701
930,487
967,706
1,006,415
100,000
( 11,622)
852,981
5,295
( 17,909)
725,151
60,000
( 19,000)
2,889,882
0
0
1,272,370
0
0
1,250,264
0
0
928,230
0
0
958,329
0
0
471,862
0
0
517,984
0
0
586,091
0
0
623,178
0
0
656,240
0
0
688,858
0
0
0
0
0
0
0
0
0
0
0
0
0
852,981
725,151
2,889,882
1,272,370
1,250,264
928,230
958,329
471,862
517,984
586,091
623,178
656,240
688,858
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
36
Statement 2 - Forecast Statement of Comprehensive Income 2012 to 2022
– by Program
Revenues
Governance
General Purpose Funding
Law, Order, Public Safety
Health
Education & Welfare
Housing
Community Amenities
Recreation and Culture
Transport
Economic Services
Other Property and Services
Expenses Excluding Finance Costs
Governance
General Purpose Funding
Law, Order, Public Safety
Health
Education & Welfare
Housing
Community Amenities
Recreation and Culture
Transport
Economic Services
Other Property and Services
Finance Costs
Governance
General Purpose Funding
Law, Order, Public Safety
Health
Education & Welfare
Housing
Community Amenities
Recreation and Culture
Transport
Economic Services
Other Property and Services
NET RESULT
Other Comprehensive Income
TOTAL COMPREHENSIVE INCOME
2009-10
$
2010-11
$
131,327
1,954,839
20,195
708,856
4,245
142,686
65,335
73,381
756,421
25,943
52,777
3,936,005
Base
$
78,301
2,152,201
40,494
784,512
3,710
163,146
138,317
83,082
537,610
74,422
58,340
4,114,135
2012-13
$
52,276
2,041,661
168,622
1,214,617
3,600
396,496
215,454
804,225
1,640,238
138,597
36,500
6,712,286
( 232,019)
( 246,112) ( 284,204)
( 23,375)
( 29,259)
( 30,251)
( 77,455)
( 94,124) ( 240,484)
( 878,648) ( 1,029,099) ( 864,741)
( 3,462)
( 1,130)
( 5,000)
( 244,682)
( 261,457) ( 352,194)
( 141,893)
( 137,325) ( 367,261)
( 455,796)
( 513,340) ( 529,004)
( 877,815)
( 888,744) ( 976,729)
( 89,639)
( 102,326) ( 118,179)
( 32,170)
( 52,282)
( 26,957)
( 3,056,954) ( 3,355,198) ( 3,795,004)
2013-14
$
29,367
2,028,272
158,498
773,518
3,744
412,356
156,665
240,219
1,270,823
146,449
37,960
5,257,871
2014-15
$
30,542
2,109,403
164,838
804,460
3,894
188,851
162,931
426,148
1,300,901
150,771
39,479
5,382,218
2015-16
$
31,763
2,193,781
171,432
836,638
4,050
196,405
169,448
79,194
1,332,182
154,568
41,058
5,210,519
2016-17
$
33,032
2,281,532
178,289
870,104
4,212
204,263
176,226
82,361
1,364,714
162,273
42,700
5,399,706
2017-18
$
34,353
2,372,793
185,420
904,908
4,381
212,433
183,276
85,655
879,684
166,591
44,409
5,073,903
2018-19
$
35,727
2,467,705
192,837
941,104
4,556
220,930
190,606
89,080
914,871
168,368
46,187
5,271,971
2019-20
$
37,157
2,566,413
200,550
978,748
4,738
229,767
198,231
92,642
951,467
173,138
48,035
5,480,886
2020-21
$
38,643
2,669,070
208,571
1,017,899
4,927
238,956
206,161
96,349
989,525
181,579
49,957
5,701,637
40,189
2,775,833
216,914
1,058,615
5,124
248,515
214,407
100,205
1,029,106
183,814
51,956
5,924,678
41,795
2,886,867
225,591
1,100,958
5,329
258,455
222,985
104,214
1,070,271
190,935
54,034
6,161,434
( 295,635) ( 307,363) ( 319,481) ( 332,146) ( 345,155) ( 358,115) ( 370,855) ( 385,405) ( 400,458) ( 416,276)
( 31,461)
( 32,720)
( 34,030)
( 35,391)
( 36,806)
( 38,278)
( 39,809)
( 41,402)
( 43,059)
( 44,781)
( 250,167) ( 260,079) ( 270,313) ( 281,016) ( 291,990) ( 302,855) ( 313,449) ( 325,716) ( 338,393) ( 351,737)
( 899,464) ( 935,313) ( 972,503) ( 1,011,260) ( 1,051,352) ( 1,092,313) ( 1,133,977) ( 1,178,968) ( 1,225,656) ( 1,274,425)
( 5,200)
( 5,408)
( 5,624)
( 5,849)
( 6,083)
( 6,326)
( 6,579)
( 6,842)
( 7,116)
( 7,401)
( 366,481) ( 380,941) ( 395,824) ( 411,429) ( 427,330) ( 442,721) ( 457,258) ( 474,979) ( 493,248) ( 512,580)
( 381,949) ( 397,204) ( 413,048) ( 429,539) ( 446,652) ( 464,313) ( 482,505) ( 501,738) ( 521,721) ( 542,541)
( 550,430) ( 572,167) ( 594,560) ( 618,020) ( 641,960) ( 665,256) ( 687,425) ( 714,127) ( 741,671) ( 770,777)
( 997,558) ( 1,035,633) ( 1,073,819) ( 1,114,681) ( 1,154,167) ( 1,184,751) ( 1,203,079) ( 1,246,003) ( 1,289,140) ( 1,337,049)
( 122,936) ( 127,851) ( 132,962) ( 138,278) ( 143,801) ( 149,535) ( 155,487) ( 161,703) ( 168,162) ( 174,883)
( 28,186)
( 29,133)
( 29,971)
( 30,963)
( 31,691)
( 31,399)
( 29,750)
( 30,420)
( 30,969)
( 31,843)
( 3,929,467) ( 4,083,812) ( 4,242,135) ( 4,408,572) ( 4,576,987) ( 4,735,862) ( 4,880,173) ( 5,067,303) ( 5,259,593) ( 5,464,293)
0
0
0
( 5,665)
0
( 6,797)
0
( 7,241)
( 6,367)
0
0
( 26,070)
0
0
0
( 4,612)
0
( 5,103)
0
( 6,610)
( 17,461)
0
0
( 33,786)
( 1,400)
0
0
( 3,500)
0
( 3,000)
0
( 2,500)
( 17,000)
0
0
( 27,400)
0
0
0
( 2,299)
0
( 3,595)
0
( 5,440)
( 44,700)
0
0
( 56,034)
0
0
0
( 1,017)
0
( 2,955)
0
( 4,751)
( 39,419)
0
0
( 48,142)
0
0
0
0
0
( 2,257)
0
( 4,024)
( 33,873)
0
0
( 40,154)
0
0
0
0
0
( 1,497)
0
( 3,258)
( 28,050)
0
0
( 32,805)
0
0
0
0
0
( 668)
0
( 2,450)
( 21,936)
0
0
( 25,054)
0
0
0
0
0
0
0
( 1,599)
( 16,526)
0
0
( 18,125)
0
0
0
0
0
0
0
( 703)
( 13,919)
0
0
( 14,622)
0
0
0
0
0
0
0
0
( 11,156)
0
0
( 11,156)
0
0
0
0
0
0
0
0
( 8,845)
0
0
( 8,845)
0
0
0
0
0
0
0
0
( 8,283)
0
0
( 8,283)
852,981
725,151
2,889,882
1,272,370
1,250,264
928,230
958,329
471,862
517,984
586,091
623,178
656,240
688,858
0
0
0
0
0
0
0
0
0
0
0
0
0
852,981
725,151
2,889,882
1,272,370
1,250,264
928,230
958,329
471,862
517,984
586,091
623,178
656,240
688,858
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
2021-22
$
Shire of Three Springs  Long Term Financial Plan  2012-2022
37
Statement 3 - Forecast Statement of Financial Position 2012-2022
2009-10
$
CURRENT ASSETS
Unrestricted Cash and Equivalents
Restricted Cash and Cash Equivalent
Non-Cash Investments
Trade and Other Receivables
Inventories
2010-11
$
Base
$
2012-13
$
1,139,766
601,302
0
122,127
19,140
1,882,335
2015-16
$
1,139,766
627,447
0
122,127
19,140
1,908,480
2016-17
$
1,139,766
600,397
0
122,127
19,140
1,881,430
2017-18
$
1,139,766
630,759
0
122,127
19,140
1,911,792
2018-19
$
1,139,766
731,890
0
122,127
19,140
2,012,923
2019-20
$
1,139,766
706,149
0
122,127
19,140
1,987,182
2020-21
$
1,139,766
775,383
0
122,127
19,140
2,056,416
2021-22
$
1,119,717
176,769
0
178,072
34,402
1,508,960
1,139,766
451,769
0
122,127
19,140
1,732,802
TOTAL NON-CURRENT ASSETS
4,926
8,000
4,580,483
17,595,657
22,189,066
6,844
8,000
4,377,779
18,657,303
23,049,926
6,844
8,000
6,173,624
20,358,914
26,547,382
6,844
6,844
6,844
6,844
6,844
6,844
6,844
6,844
6,844
6,844
8,000
8,000
8,000
8,000
8,000
8,000
8,000
8,000
8,000
8,000
6,563,840 7,308,407 7,192,991 7,521,095 7,520,414 7,441,053 7,335,778 7,388,639 7,396,824 7,519,919
21,061,810 21,392,999 22,199,108 22,654,559 22,997,772 23,504,154 24,030,285 24,577,007 25,145,196 25,735,765
27,640,494 28,716,250 29,406,943 30,190,498 30,533,030 30,960,051 31,380,907 31,980,490 32,556,864 33,290,944
TOTAL ASSETS
23,912,602
24,558,886
28,280,184
29,406,255 30,502,328 31,289,278 32,098,978 32,414,460 32,871,843 33,393,830 33,967,672 34,613,280 35,290,944
419,112
83,619
114,595
446,208
67,483
107,388
1,281,033
242,130
107,388
1,281,033
154,191
107,388
1,281,033
141,280
107,388
1,281,033
148,629
107,388
1,281,033
156,380
107,388
1,281,033
60,601
107,388
1,281,033
64,104
107,388
1,281,033
49,336
107,388
1,281,033
10,632
107,388
1,281,033
11,194
107,388
1,281,033
11,786
107,388
617,326
621,079
1,630,551
1,542,612
1,529,701
1,537,050
1,544,801
1,449,022
1,452,525
1,437,757
1,399,053
1,399,615
1,400,207
497,941
28,252
526,193
430,458
13,116
443,574
850,768
13,116
863,884
792,408
13,116
805,524
651,128
13,116
664,244
502,499
13,116
515,615
346,119
13,116
359,235
285,518
13,116
298,634
221,414
13,116
234,530
172,078
13,116
185,194
161,446
13,116
174,562
150,252
13,116
163,368
138,466
13,116
151,582
1,143,519
1,064,653
2,494,435
2,348,136
2,193,945
2,052,665
1,904,036
1,747,656
1,687,055
1,622,951
1,573,615
1,562,983
1,551,789
NON-CURRENT ASSETS
Other Receivables
Inventories
Property Plant and Equipment
Infrastructure
1,139,766
505,045
0
122,127
19,140
1,786,078
2014-15
$
459,265
1,049,146
0
184,863
30,262
1,723,536
TOTAL CURRENT ASSETS
1,139,766
484,728
0
122,127
19,140
1,765,761
2013-14
$
1,139,766
739,383
0
122,127
19,140
2,020,416
CURRENT LIABILITIES
Trade and Other Payables
Current Portion of Long-term Liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Long-term Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Retained Surplus
Reserves - Cash Backed
Reserves - Revaluation
TOTAL EQUITY
22,769,083 23,494,233 25,785,749
27,058,119 28,308,383 29,236,613 30,194,942 30,666,804 31,184,788 31,770,879 32,394,057 33,050,297 33,739,155
21,253,896 21,970,513 23,987,029
168,236
176,769
451,769
1,346,951
1,346,951
1,346,951
22,769,083 23,494,233 25,785,749
25,226,440 26,456,387 27,288,360 28,220,544 28,719,456 29,207,078 29,692,038 30,340,957 30,927,963 31,652,821
484,728
505,045
601,302
627,447
600,397
630,759
731,890
706,149
775,383
739,383
1,346,951 1,346,951 1,346,951 1,346,951 1,346,951 1,346,951 1,346,951 1,346,951 1,346,951 1,346,951
27,058,119 28,308,383 29,236,613 30,194,942 30,666,804 31,184,788 31,770,879 32,394,057 33,050,297 33,739,155
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
38
Statement 4 - Forecast Statement of Changes in Equity 2012-2022
RETAINED SURPLUS
Opening Balance
Net Result
Total Other Comprehensive Income
Amount transferred (to)/from Reserves
Closing Balance
RESERVES - CASH/INVESTMENT BACKED
Opening Balance
Amount transferred to/(from) Retained Surplus
Closing Balance
ASSET REVALUATION RESERVES
Opening Balance
Total Other Comprehensive Income
Closing Balance
TOTAL EQUITY
2009-10
$
2010-11
$
Base
$
20,406,929
852,981
0
( 6,014)
21,253,896
21,253,896 21,372,147
725,151 2,889,882
0
0
( 8,533) ( 275,000)
21,970,514 23,987,029
2012-13
$
2013-14
$
2014-15
$
2015-16
$
2016-17
$
2017-18
$
2018-19
$
2019-20
$
2020-21
$
23,987,029 25,226,440 26,456,387 27,288,360 28,220,544 28,719,456 29,207,078 29,692,038 30,340,957 30,927,963
1,272,370 1,250,264
928,230
958,329
471,862
517,984
586,091
623,178
656,240
688,858
0
0
0
0
0
0
0
0
0
0
( 32,959)
( 20,317)
( 96,257)
( 26,145)
27,050
( 30,362) ( 101,131)
25,741
( 69,234)
36,000
25,226,440 26,456,387 27,288,360 28,220,544 28,719,456 29,207,078 29,692,038 30,340,957 30,927,963 31,652,821
162,222
6,014
168,236
168,236
8,533
176,769
176,769
275,000
451,769
451,769
32,959
484,728
484,728
20,317
505,045
505,045
96,257
601,302
601,302
26,145
627,447
627,447
( 27,050)
600,397
600,397
30,362
630,759
630,759
101,131
731,890
731,890
( 25,741)
706,149
706,149
69,234
775,383
775,383
( 36,000)
739,383
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
1,346,951
0
1,346,951
22,769,083
23,494,234 25,785,749
27,058,119 28,308,383 29,236,613 30,194,942 30,666,804 31,184,788 31,770,879 32,394,057 33,050,297 33,739,155
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
2021-22
$
Shire of Three Springs  Long Term Financial Plan  2012-2022
39
Statement 5 - Forecast Statement of Cashflows 2012-2022
Cash Flows From Operating Activities
Receipts
Rates
Operating grants, subsidies and contributions
Fees and Charges
Service Charges
Interest Earnings
Other Revenue
Payments
Employee Costs
Materials and Contracts
Utility Charges
Insurance Expenses
Interest expenses
Other Expenditure
Net Cash Provided By (Used In) Operating Activities
Cash Flows from Investing Activities
Payments for Development of Land Held for Resale
Payments for Purchase of Property, Plant & Equipment
Payments for Construction of Infrastructure
Advances to Community Groups
Non-Operating Grants, Subsidies and Contributions
Proceeds from Sale of Plant & Equipment
Proceeds from Sale of Land Held for Resale
Transfers (to)/from Investments
Net Cash Provided By (Used In) Investing Activities
Cash Flows from Financing Activities
Repayment of Debentures
Proceeds from Self Supporting Loans
Proceeds from New Debentures
Net Cash Provided By (Used In) Financing Activities
Net Increase (Decrease) in Cash Held
Cash at Beginning of Year
Cash and Cash Equivalents at the End of Year
2012-13
$
2013-14
$
2014-15
$
2015-16
$
2016-17
$
2017-18
$
2018-19
$
2019-20
$
2020-21
$
2021-22
$
1,463,853
982,900
1,082,283
0
79,577
25,532
3,634,145
1,522,407
1,022,217
1,125,575
0
81,225
26,554
3,777,978
1,583,305
1,063,106
1,170,596
0
82,240
27,616
3,926,863
1,646,637
1,105,628
1,217,418
0
87,053
28,721
4,085,457
1,712,502
1,149,853
1,266,115
0
88,361
29,871
4,246,702
1,781,001
1,195,846
1,316,759
0
87,009
31,067
4,411,682
1,852,241
1,243,681
1,369,428
0
88,525
32,310
4,586,185
1,926,331
1,293,429
1,424,206
0
93,582
33,602
4,771,150
2,003,384
1,345,168
1,481,178
0
92,296
34,946
4,956,972
2,083,520
1,398,973
1,540,426
0
95,756
36,344
5,155,019
( 1,635,284)
( 957,595)
( 128,232)
( 56,034)
( 155,824)
( 309,993)
( 3,242,962)
391,183
( 1,700,693)
( 995,903)
( 133,360)
( 48,142)
( 162,056)
( 322,395)
( 3,362,549)
415,429
( 1,768,720)
( 1,035,742)
( 138,695)
( 40,154)
( 168,536)
( 335,291)
( 3,487,138)
439,725
( 1,839,468)
( 1,077,169)
( 144,241)
( 32,805)
( 175,276)
( 348,705)
( 3,617,664)
467,793
( 1,913,041)
( 1,120,256)
( 150,009)
( 25,054)
( 182,284)
( 362,653)
( 3,753,297)
493,405
( 1,989,560)
( 1,165,061)
( 156,010)
( 18,125)
( 189,575)
( 377,158)
( 3,895,489)
516,193
( 2,069,139)
( 1,211,662)
( 162,249)
( 14,622)
( 197,156)
( 392,243)
( 4,047,071)
539,114
( 2,151,905)
( 1,260,124)
( 168,740)
( 11,156)
( 205,043)
( 407,932)
( 4,204,900)
566,250
( 2,237,982)
( 1,310,532)
( 175,489)
( 8,845)
( 213,245)
( 424,250)
( 4,370,343)
586,629
( 2,327,501)
( 1,362,945)
( 182,508)
( 8,283)
( 221,776)
( 441,218)
( 4,544,231)
610,788
0
( 680,000)
( 1,190,000)
0
1,623,726
34,349
0
0
( 211,925)
0
( 1,394,000)
( 833,019)
0
1,604,240
381,858
0
0
( 240,921)
0
( 395,000)
( 1,330,000)
0
1,283,656
239,156
0
0
( 202,188)
0
( 657,000)
( 996,652)
0
1,314,249
46,384
0
0
( 293,019)
0
( 340,000)
( 900,000)
0
827,201
48,724
0
0
( 364,075)
0
( 342,000)
( 1,082,000)
0
860,289
138,481
0
0
( 425,230)
0
( 503,000)
( 1,121,280)
0
894,701
355,700
0
0
( 373,879)
0
( 574,000)
( 1,162,131)
0
930,487
262,989
0
0
( 542,655)
0
( 322,400)
( 1,204,616)
0
967,706
52,547
0
0
( 506,763)
0
( 633,216)
( 1,248,801)
0
1,006,415
240,008
0
0
( 635,594)
( 146,299)
0
0
( 146,299)
32,959
1,591,535
1,624,494
( 154,191)
0
0
( 154,191)
20,317
1,624,494
1,644,811
( 141,280)
0
0
( 141,280)
96,257
1,644,811
1,741,068
( 148,629)
0
0
( 148,629)
26,145
1,741,068
1,767,213
( 156,380)
0
0
( 156,380)
( 27,050)
1,767,213
1,740,163
( 60,601)
0
0
( 60,601)
30,362
1,740,163
1,770,525
( 64,104)
0
0
( 64,104)
101,131
1,770,525
1,871,656
( 49,336)
0
0
( 49,336)
( 25,741)
1,871,656
1,845,915
( 10,632)
0
0
( 10,632)
69,234
1,845,915
1,915,149
( 11,194)
0
0
( 11,194)
( 36,000)
1,915,149
1,879,149
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
40
Statement 6 - Forecast Statement of Funding 2012-2022
FUNDING FROM OPERATIONAL ACTIVITIES
Revenues
Rates
Operating grants, subsidies and contributions
Profit on Asset Disposal
Fees and charges
Service charges
Interest earnings
Other revenue
Expenses
Employee costs
Materials and contracts
Utility charges (electricity, gas, water etc.)
Depreciation on non-current assets
Loss on Asset Disposal
Interest Expense
Insurance expense
Other expenditure
Funding Position Adjustments
Depreciation on non-current assets
Net profit and losses on Disposal
Movement in Accruals
Movement in Deferred Pensioner Rates (Non-Current)
Movement in Employee Benefit Provisions
Write-off of assets
Net Funding From Operational Activities
FUNDING FROM CAPITAL ACTIVITIES
Inflows
Proceeds on Disposal
Non-Operating grants, subsidies and contributions
Outflows
Purchase of land held for resale
Purchase of Property Plant and Equipment
Purchase of Infrastructure
Net Funding From Capital Activities
FUNDING FROM FINANCING ACTIVITIES
Inflows
Transfer from Reserves
New Borrowings
Self Supporting Loan
Outflows
Transfer to Reserves
Advances to Community Groups
Repayment of Past Borrowings
Net Funding From Financing Activities
Estimated Surplus/Deficit July 1 B/Fwd
Estimated Surplus/Deficit June 30 C/Fwd
2012-13
$
2013-14
$
2014-15
$
2015-16
$
2016-17
$
2017-18
$
2018-19
$
2019-20
$
2020-21
$
2021-22
$
1,463,853
982,900
0
1,082,283
0
79,577
25,532
3,634,145
1,522,407
1,022,217
0
1,125,575
0
81,225
26,554
3,777,978
1,583,305
1,063,106
0
1,170,596
0
82,240
27,616
3,926,863
1,646,637
1,105,628
0
1,217,418
0
87,053
28,721
4,085,457
1,712,502
1,149,853
0
1,266,115
0
88,361
29,871
4,246,702
1,781,001
1,195,846
0
1,316,759
0
87,009
31,067
4,411,682
1,852,241
1,243,681
0
1,369,428
0
88,525
32,310
4,586,185
1,926,331
1,293,429
0
1,424,206
0
93,582
33,602
4,771,150
2,003,384
1,345,168
0
1,481,178
0
92,296
34,946
4,956,972
2,083,520
1,398,973
0
1,540,426
0
95,756
36,344
5,155,019
( 1,635,284)
( 957,595)
( 128,232)
( 742,539)
0
( 56,034)
( 155,824)
( 309,993)
( 3,985,501)
( 351,356)
( 1,700,693)
( 995,903)
( 133,360)
( 769,405)
0
( 48,142)
( 162,056)
( 322,395)
( 4,131,954)
( 353,976)
( 1,768,720)
( 1,035,742)
( 138,695)
( 795,151)
0
( 40,154)
( 168,536)
( 335,291)
( 4,282,289)
( 355,426)
( 1,839,468)
( 1,077,169)
( 144,241)
( 823,713)
0
( 32,805)
( 175,276)
( 348,705)
( 4,441,377)
( 355,920)
( 1,913,041)
( 1,120,256)
( 150,009)
( 848,744)
0
( 25,054)
( 182,284)
( 362,653)
( 4,602,041)
( 355,339)
( 1,989,560)
( 1,165,061)
( 156,010)
( 858,498)
0
( 18,125)
( 189,575)
( 377,158)
( 4,753,987)
( 342,305)
( 2,069,139)
( 1,211,662)
( 162,249)
( 847,724)
0
( 14,622)
( 197,156)
( 392,243)
( 4,894,795)
( 308,610)
( 2,151,905)
( 1,260,124)
( 168,740)
( 873,559)
0
( 11,156)
( 205,043)
( 407,932)
( 5,078,459)
( 307,309)
( 2,237,982)
( 1,310,532)
( 175,489)
( 898,095)
0
( 8,845)
( 213,245)
( 424,250)
( 5,268,438)
( 311,466)
( 2,327,501)
( 1,362,945)
( 182,508)
( 928,345)
0
( 8,283)
( 221,776)
( 441,218)
( 5,472,576)
( 317,557)
742,539
0
0
0
0
0
391,183
769,405
0
0
0
0
0
415,429
795,151
0
0
0
0
0
439,725
823,713
0
0
0
0
0
467,793
848,744
0
0
0
0
0
493,405
858,498
0
0
0
0
0
516,193
847,724
0
0
0
0
0
539,114
873,559
0
0
0
0
0
566,250
898,095
0
0
0
0
0
586,629
928,345
0
0
0
0
0
610,788
34,349
1,623,726
381,858
1,604,240
239,156
1,283,656
46,384
1,314,249
48,724
827,201
138,481
860,289
355,700
894,701
262,989
930,487
52,547
967,706
240,008
1,006,415
0
( 680,000)
( 1,190,000)
( 211,925)
0
( 1,394,000)
( 833,019)
( 240,921)
0
( 395,000)
( 1,330,000)
( 202,188)
0
( 657,000)
( 996,652)
( 293,019)
0
( 340,000)
( 900,000)
( 364,075)
0
( 342,000)
( 1,082,000)
( 425,230)
0
( 503,000)
( 1,121,280)
( 373,879)
0
( 574,000)
( 1,162,131)
( 542,655)
0
( 322,400)
( 1,204,616)
( 506,763)
0
( 633,216)
( 1,248,801)
( 635,594)
0
0
0
0
0
0
0
0
0
0
0
0
54,503
0
0
0
0
0
0
0
0
58,415
0
0
0
0
0
70,848
0
0
( 32,959)
0
( 146,299)
( 179,258)
0
0
( 20,317)
0
( 154,191)
( 174,508)
0
0
( 96,257)
0
( 141,280)
( 237,537)
0
0
( 26,145)
0
( 148,629)
( 174,774)
0
0
( 27,453)
0
( 156,380)
( 129,330)
0
0
( 30,362)
0
( 60,601)
( 90,963)
0
0
( 101,131)
0
( 64,104)
( 165,235)
0
0
( 32,674)
0
( 49,336)
( 23,595)
0
0
( 69,234)
0
( 10,632)
( 79,866)
0
0
( 34,848)
0
( 11,194)
24,806
0
0
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
41
Statement 7 - Forecast Statement of Net Current Asset Composition 2012-2022
Estimated Surplus/Deficit July 1 B/Fwd
CURRENT ASSETS
Unrestricted Cash and Equivalents
Restricted Cash and Cash Equivalent
Non-Cash Investments
Trade and Other Receivables
Inventories
CURRENT LIABILITIES
Trade and Other Payables
Reserves
Current Self Supporting Loans Receivable
Movement in Deferred Pensioner Rates (Non-Current)
Movement in Accrued Salaries and Wages
Estimated Surplus/Deficit June 30 C/Fwd
2012-13
$
0
1,139,766
484,728
0
122,127
19,140
0
( 1,281,033)
( 484,728)
0
0
0
0
2013-14
$
0
1,139,766
505,045
0
122,127
19,140
0
( 1,281,033)
( 505,045)
0
0
0
0
2014-15
$
0
1,139,766
601,302
0
122,127
19,140
0
( 1,281,033)
( 601,302)
0
0
0
0
2015-16
$
0
1,139,766
627,447
0
122,127
19,140
0
( 1,281,033)
( 627,447)
0
0
0
0
2016-17
$
0
1,139,766
600,397
0
122,127
19,140
0
( 1,281,033)
( 600,397)
0
0
0
0
2017-18
$
0
1,139,766
630,759
0
122,127
19,140
0
( 1,281,033)
( 630,759)
0
0
0
0
2018-19
$
0
1,139,766
731,890
0
122,127
19,140
0
( 1,281,033)
( 731,890)
0
0
0
0
2019-20
$
0
1,139,766
706,149
0
122,127
19,140
0
( 1,281,033)
( 706,149)
0
0
0
0
2020-21
$
0
1,139,766
775,383
0
122,127
19,140
0
( 1,281,033)
( 775,383)
0
0
0
0
2021-22
$
1,139,766
739,383
0
122,127
19,140
0
( 1,281,033)
( 739,383)
0
0
0
0
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
0
42
Statement 8 - Forecast Statement of Fixed Asset Movements 2012-2022
CAPITAL WORKS - INFRASTRUCTURE
Roads
Drainage
Parks and Gardens
Footpaths and Cycleways
Total Capital Works - Infrastructure
Represented by:
Additions - Assets at no cost
Additions - Expansion, Upgrades and New
Additions - Renewal
Total Capital Works - Infrastructure
Asset Movement Reconciliation
Total Capital Works Infrastructure
Depreciation Infrastructure
Net Book Value of disposed/Written Off assets
Net Movement in Infrastructure Assets
CAPITAL WORKS - PROPERTY,PLANT AND EQUIPMENT
Land
Buildings
Plant and Equipment
Furniture and Equipment
Other non-Infrastructure
Total Capital Works Property, Plant and Equipment
Represented by:
Additions - Assets at no cost
Additions - Expansion, Upgrades and New
Additions - Renewal
Total Capital Works Property, Plant and Equipment
Asset Movement Reconciliation
Total Capital Works Property,Plant and Equipment
Depreciation Property, Plant and Equipment
Net Book Value of disposed/Written Off assets
Net Movement in Property, Plant and Equipment
CAPITAL WORKS - TOTALS
Capital Works
Total Capital Works Infrastructure
Total Capital Works Property, Plant and Equipment
Total Capital Works
Fixed Asset Movement
Net Movement in Infrastructure Assets
Net Movement in Property, Plant and Equipment
Net Movement in Fixed Assets
2012-13
$
2013-14
$
2014-15
$
2015-16
$
2016-17
$
2017-18
$
2018-19
$
2019-20
$
2020-21
$
2021-22
$
1,090,000
0
0
100,000
1,190,000
733,019
0
0
100,000
833,019
1,080,000
0
200,000
50,000
1,330,000
896,652
0
50,000
50,000
996,652
800,000
0
50,000
50,000
900,000
982,000
0
50,000
50,000
1,082,000
1,021,280
0
50,000
50,000
1,121,280
1,062,131
0
50,000
50,000
1,162,131
1,104,616
0
50,000
50,000
1,204,616
1,148,801
0
50,000
50,000
1,248,801
0
100,000
1,090,000
1,190,000
0
100,000
733,019
833,019
0
200,000
1,130,000
1,330,000
0
0
996,652
996,652
0
0
900,000
900,000
0
0
1,082,000
1,082,000
0
0
1,121,280
1,121,280
0
0
1,162,131
1,162,131
0
0
1,204,616
1,204,616
0
0
1,248,801
1,248,801
1,190,000
( 487,104)
0
702,896
833,019
( 501,830)
0
331,189
1,330,000
( 523,891)
0
806,109
996,652
( 541,201)
0
455,451
900,000
( 556,787)
0
343,213
1,082,000
( 575,618)
0
506,382
1,121,280
( 595,149)
0
526,131
1,162,131
( 615,409)
0
546,722
1,204,616
( 636,427)
0
568,189
1,248,801
( 658,232)
0
590,569
0
600,000
80,000
0
0
680,000
0
1,050,000
344,000
0
0
1,394,000
0
100,000
295,000
0
0
395,000
0
500,000
157,000
0
0
657,000
0
100,000
240,000
0
0
340,000
0
100,000
242,000
0
0
342,000
0
250,000
253,000
0
0
503,000
0
260,000
314,000
0
0
574,000
0
270,400
52,000
0
0
322,400
0
281,216
352,000
0
0
633,216
0
500,000
180,000
680,000
0
1,050,000
344,000
1,394,000
0
0
395,000
395,000
0
400,000
257,000
657,000
0
0
340,000
340,000
0
0
342,000
342,000
0
0
503,000
503,000
0
0
574,000
574,000
0
0
322,400
322,400
0
0
633,216
633,216
680,000
( 255,435)
( 34,349)
390,216
1,394,000
( 267,575)
( 381,858)
744,567
395,000
( 271,260)
( 239,156)
( 115,416)
657,000
( 282,512)
( 46,384)
328,104
340,000
( 291,957)
( 48,724)
( 681)
342,000
( 282,880)
( 138,481)
( 79,361)
503,000
( 252,575)
( 355,700)
( 105,275)
574,000
( 258,150)
( 262,989)
52,861
322,400
( 261,668)
( 52,547)
8,185
633,216
( 270,113)
( 240,008)
123,095
1,190,000
680,000
1,870,000
833,019
1,394,000
2,227,019
1,330,000
395,000
1,725,000
996,652
657,000
1,653,652
900,000
340,000
1,240,000
1,082,000
342,000
1,424,000
1,121,280
503,000
1,624,280
1,162,131
574,000
1,736,131
1,204,616
322,400
1,527,016
1,248,801
633,216
1,882,017
702,896
390,216
1,093,112
331,189
744,567
1,075,756
806,109
( 115,416)
690,693
455,451
328,104
783,555
343,213
( 681)
342,532
506,382
( 79,361)
427,021
526,131
( 105,275)
420,856
546,722
52,861
599,583
568,189
8,185
576,374
590,569
123,095
713,664
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Shire of Three Springs  Long Term Financial Plan  2012-2022
43
Forecast Significant Accounting Policies 2012-2022
Significant Accounting Policies
c)
Basis of Preparation
Receivables and payables in the statement of financial
position are stated inclusive of applicable GST. The net
amount of GST recoverable from, or payable to, the ATO is
included with receivables or payables in the statement of
financial position.
The significant accounting policies which have been adopted
in the preparation of these forecast financial statements are:
a)
Basis of Preparation
The forecast financial statements have been prepared in
accordance with Australian Accounting Standards (as they
apply to local governments and not-for-profit entities), other
authoritative pronouncements of the Australian Accounting
Standards Board, the Local Government Act 1995 and
accompanying regulations.
Except for cash flow and rate setting information, the report
has also been prepared on the accrual basis and is based on
historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets,
financial assets and liabilities.
Critical Accounting Estimates
The preparation of forecast financial statements in
conformity with Australian Accounting Standards requires
management to make judgements, estimates and
assumptions that effect the application of policies and
reported amounts of assets and liabilities, income and
expenses.
The estimates and associated assumptions are based on
historical experience and various other factors that are
believed to be reasonable under the circumstances; the
results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may
differ from these estimates and forecasts.
b)
The Local Government Reporting Entity
All Funds through which the Council controls resources to
carry on its functions have been included in the forecast
financial statements.
In the process of reporting on the local government as a
single unit, all transactions and balances between those
funds (for example, loans and transfers between Funds) have
been eliminated.
All monies held in the Trust Fund are excluded from the
forecast financial statements.
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Goods and Services Tax
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the ATO
are presented as operating cash flows.
d)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash at
bank, deposits held at call with banks, other short term
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value and bank overdrafts.
Bank overdrafts are shown as short term borrowings in
current liabilities in the statement of financial position.
e)
Trade and Other Receivables
Revenue arising from the sale of property is recognised in
the operating statement as at the time of signing a binding
contract of sale.
Land held for resale is classified as current except where it is
held as non-current based on Council's intention to release
for sale.
g)
Fixed Assets
Each class of fixed assets is carried at cost or fair value as
indicated less, where applicable, any accumulated
depreciation and impairment losses
Initial Recognition
All assets are initially recognised at cost. Cost is determined
as the fair value of the assets given as consideration plus
costs incidental to the acquisition. For assets acquired at no
cost or for nominal consideration, cost is determined as fair
value at the date of acquisition. The cost of non-current
assets constructed by the Council includes the cost of all
materials used in construction, direct labour on the project
and an appropriate portion of variable and fixed overheads.
Collectability of trade and other receivables is reviewed on
an ongoing basis. Debts that are known to be uncollectible
are written off when identified. An allowance for doubtful
debts is raised when there is objective evidence that they
will not be collectible.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Council and the cost of the item can
be measured reliably. All other repairs and maintenance are
recognised as expenses in the statement of comprehensive
income in the period in which they are incurred.
f)
Revaluation
Inventories
General
Land held for Resale
Certain asset classes may be revalued on a regular basis such
that the carrying values are not materially different from fair
value. For infrastructure and other asset classes where no
active market exists, fair value is determined to be the
current replacement cost of an asset less, where applicable,
accumulated depreciation calculated on the basis of such
cost to reflect the already consumed or expired future
economic benefits of the asset.
Land purchased for development and/or resale is valued at
the lower of cost and net realisable value. Cost includes the
cost of acquisition, development and interest incurred on the
financing of that land during its development. Finance Costs
and holding charges incurred after development is
completed are expensed.
Those assets carried at a revalued amount, being their fair
value at the date of revaluation less any subsequent
accumulated depreciation and accumulated impairment
losses, are to be revalued with sufficient regularity to ensure
the carrying amount does not differ materially from that
determined using fair value at reporting date.
Inventories are valued at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale.
Shire of Three Springs  Long Term Financial Plan  2012-2022
44
Forecast Significant Accounting Policies 2012-2022
The forecast financial statements assume an appropriate
depreciation rate is being charged. On the basis of an
appropriate depreciation rate being charged no material
gains or losses on revaluation of assets are forecast to occur.
Land under Roads
appropriate depreciation rate being charged no material
gains or losses on disposal of assets are forecast to occur.
When revalued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to
retained earnings.
In Western Australia, all land under roads is Crown Land, the
responsibility for managing which, is vested in the local
government.
i)
Effective as at 1 July 2008, Council elected not to recognise
any value for land under roads acquired on or before 30 June
2008. This accords with the treatment available in Australian
Accounting Standard AASB1051 - Land Under Roads and the
fact Local Government (Financial Management) Regulation
16(a)(i) prohibits local governments from recognising such
land as an asset.
Council classifies its investments in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-forsale financial assets. The classification depends on the
purpose for which the investments were acquired.
Management determines the classification of its investments
at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each
reporting date.
In respect of land under roads acquired on or after 1 July
2008, as detailed above, Local Government (Financial
Management)
Regulation
16(a)(i)
prohibits
local
governments from recognising such land as an asset.
Whilst such treatment is inconsistent with the requirements
of AASB 1051, Local Government (Financial Management)
Regulation 4(2) provides, in the event of such an
inconsistency,
the
Local
Government
(Financial
Management) Regulations prevail. Consequently, any land
under roads acquired on or after 1 July 2008 is not included
as an asset of the Council.
h)
Depreciation of Non-Current Assets
All non-current assets having a limited useful life are
separately and systematically depreciated over their useful
lives in a manner which reflects the consumption of the
future economic benefits embodied in those assets.
Assets are depreciated from the date of acquisition or, in
respect of internally constructed assets, from the time the
asset is completed and held ready for use.
Depreciation is recognised on a straight-line basis, using an
effective average rate.
The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
The forecast financial statements assume an appropriate
depreciation rate is being charged. On the basis of an
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Financial Instruments
Classification
(i) Financial assets at fair value through profit and loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of
selling in the short term. Derivatives are classified as held
for trading unless they are designated as hedges. Assets in
this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except
for those with maturities greater than 12 months after the
balance date which are classified as non-current assets.
Loans and receivables are included in trade and other
receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial
assets with fixed or determinable payments and fixed
maturities that the Council’s management has the positive
intention and ability to hold to maturity. If the Council were
to sell other than an insignificant amount of held-to-maturity
financial assets, the whole category would be tainted and
reclassified as available-for-sale. Held-to-maturity financial
assets are included in non-current assets, except for those
with maturities less than 12 months from the reporting date,
which are classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally
marketable equity securities, are non-derivatives that are
either designated in this category or not classified in any of
the other categories. They are included in non-current assets
unless management intends to dispose of the investment
within 12 months of the balance date. Investments are
designated as available-for-sale if they do not have fixed
maturities and fixed or determinable payments and
management intends to hold them for the medium to long
term.
Recognition and Derecognition
Regular purchases and sales of financial assets are
recognised on trade-date – the date on which Council
commits to purchase or sell the asset. Investments are
initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or
loss. Financial assets carried at fair value through profit or
losses are initially recognised at fair value and transaction
costs are expensed in the forecast statement of
comprehensive income. Financial assets are derecognised
when the rights to receive cash flows from the financial
assets have expired or have been transferred and Council has
transferred substantially all the risks and rewards of
ownership.
When securities classified as available-for-sale are sold, the
accumulated fair value adjustments recognised in equity are
included in the forecast statement of comprehensive income
as gains and losses from investment securities.
Subsequent Measurement
Loans and receivables and held-to-maturity investments are
carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair
value through profit and loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value
of the financial assets at fair value through profit or loss
category are presented in the forecast statement of
comprehensive income within other income or other
expenses in the period in which they arise. Dividend income
from financial assets at fair value through profit and loss is
recognised in the statement of comprehensive income as
part of revenue from continuing operations when the
Council’s right to receive payments is established. Changes
in the fair value of other monetary and non-monetary
Shire of Three Springs  Long Term Financial Plan  2012-2022
45
Forecast Significant Accounting Policies 2012-2022
securities classified as available-for-sale are recognised in
equity.
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is
available to the Council for similar financial instruments.
Where this is the case, they are capitalised as part of the cost
of the particular asset.
Council assesses at each balance date whether there is
objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified
as available-for-sale, a significant or prolonged decline in the
fair value of a security below its cost is considered as an
indicator that the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the
cumulative loss- measured as the difference between the
acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised
in profit or loss – is removed from equity and recognised in
the forecast statement of comprehensive income.
Impairment losses recognised in the statement of
comprehensive income on equity instruments classified as
available-for-sale are not reversed through the statement of
comprehensive income.
k)
Provisions are recognised when:
j)
l)
Impairment
Estimation of Fair Value
The fair value of financial assets and financial liabilities must
be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active
markets is based on quoted market prices at balance date.
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques.
The Council uses a variety of methods and makes
assumptions that are based on market conditions existing at
each balance date. These include the use of recent arm’s
length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, and
option pricing models making maximum use of market
inputs and relying as little as possible on entity-specific
inputs.
Quoted market prices or dealer quotes for similar
instruments are used for long-term debt instruments held.
Other techniques, such as estimated discounted cash flows,
are used to determine fair value for the remaining financial
instruments.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
Impairment
o)
a)
In accordance with Australian Accounting Standards the
Council's assets, other than inventories, are assessed at each
reporting date to determine whether there is any indication
they may be impaired.
At the end of each reporting period, the Council assesses
whether there is objective evidence that a financial
instrument has been impaired. In the case of available-forsale financial instruments, a prolonged decline in the value of
the instrument is considered to determine whether
impairment has arisen. Impairment losses are recognised in
profit or loss. Any cumulative decline in fair value previously
recognised in other comprehensive income is reclassified to
profit or loss at this point.
Trade and Other Payables
Trade payables and other payables represent liabilities for
goods and services provided to the Council prior to the end
of the financial year that are unpaid and arise when the
Council becomes obliged to make future payments in respect
of the purchase of these goods and services. The amounts
are unsecured and are usually paid within 30 days of
recognition.
m) Employee Benefits
Provision is made for the Council’s liability for employee
benefits arising from services rendered by employees to the
end of the reporting period. Employee benefits that are
expected to be settled within one year have been measured
at the amounts expected to be paid when the liability is
settled. Employee benefits payable later than one year have
been measured at the present value of the estimated future
cash outflows to be made for those benefits. In determining
the liability, consideration is given to employee wage
increases and the probability that the employee may not
satisfy vesting requirements.
n)
Borrowings Costs
Borrowing costs are recognised as an expense when
incurred except where they are directly attributable to the
acquisition, construction or production of a qualifying asset.
Provisions
b)
c)
The Council has a present legal or constructive
obligation as a result of past events;
for which it is probable that an outflow of
economic benefits will result; and
that outflow can be reliably measured.
Provisions are measured using the best estimate of the
amounts required to settle the obligation at the end of the
reporting period.
p)
Leases
Leases of fixed assets, where substantially all the risks and
benefits incidental to the ownership of the asset, but not
legal ownership, are transferred to the company, are
classified as finance leases.
Finance leases are capitalised recording an asset and a
liability equal to the present value of the minimum lease
payments, including any guaranteed residual value. Leased
assets are amortised over their estimated useful lives. Lease
payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.
Lease payments under operating leases, where substantially
all the risks and benefits remain with the lessor, are charged
as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a
liability and amortised on a straight line basis over the life of
the lease term.
q)
Joint Venture
The Shires interest in a joint venture has been recognised in
the financial statements by including its share of any assets,
liabilities, revenues and expenses of the joint venture within
the relevant items reported in the statement of financial
position and operating statement of comprehensive financial
position income.
The Council’s interests in joint venture entities are recorded
using the equity method of accounting in the financial report.
Where the Council contributes assets to the joint venture or
if the Council purchases assets from the joint venture, only
Shire of Three Springs  Long Term Financial Plan  2012-2022
46
Forecast Significant Accounting Policies 2012-2022
the portion of the gain or loss that is not attributable to the
Council’s share of the joint venture shall be recognised. The
Council recognises the full amount of any loss when the
contribution results in a reduction in the net realisable value
of current assets or an impairment loss.
r)
Rates, Grants, Donations and Other Contributions
Rates, grants, donations and other contributions are
recognised as revenues when the local government obtains
control over the assets comprising the contributions.
Control over assets acquired from rates is obtained at the
commencement of the rating period or, where earlier, upon
receipt of the rates.
Where contributions recognised as revenues during the
reporting period were obtained on the condition that they be
expended in a particular manner or used over a particular
period, those conditions are forecast to be discharged as at
the reporting date.
s)
Superannuation
The Council contributes to a number of Superannuation
Funds on behalf of employees. All funds to which the Council
contributes are defined contribution plans.
t)
Current and Non-Current Classification
In the determination of whether an asset or liability is
current or non-current, consideration is given to the time
UHY Haines Norton (WA) Pty Ltd
Chartered Accountants
when each asset or liability is expected to be settled. The
asset or liability is classified as current if it is expected to be
settled within the next 12 months, being the Council’s
operational cycle. In the case of liabilities where the Council
does not have the unconditional right to defer settlement
beyond 12 months, such as vested long service leave, the
liability is classified as current even if not expected to be
settled within the next 12 months. Inventories held for
trading are classified as current even if not expected to be
realised in the next 12 months except for land held for resale
where it is held as non-current based on Council’s intentions
to release for sale.
u)
Rounding Off Figures
All figures shown in this forecast financial statements, are
rounded to the nearest dollar.
The Council assessments of these new/amended standards
and interpretations have been considered and are not
considered to have any material effect, or impact on Council
with the exception of the introduction of AASB13.
AASB 13 defines fair value, establishes a framework for
measuring fair value and requires disclosures about fair
value measurements.
AASB 13 requires:
-Inputs to all fair value measurements to be categorised in
accordance with a fair value hierarchy; and
-Enhanced disclosures regarding all assets and liabilities
(including, but not limited to financial assets and financial
liabilities) measured at fair value.
New Accounting Standards and Interpretations for
application in Future Periods
AASB 13 will have particular relevance to the process of the
Council adopting fair value methodology in relation to its
assets as mandated from 1 July 2012. Apart from the changes
in value in relation to assets to be revalued (which are
mandated by legislation and not changes to the standard) it
is not expected to significantly impact the Council as the
framework embodied in AASB 13 does not differ significantly
from that which is present in existing standards.
Australian Accounting Standards and Interpretations that
have recently been issued or amended but are not yet
effective have not been adopted by the Council for the
forecast annual reporting periods.
Amendments to the legislation require the phasing in of fair
value for fixed assets over the next three years from 1 July
2012, it is not possible to estimate the likely amount of the
revaluations.
v)
Comparative Figures
Where required, comparative figures have been adjusted to
conform with changes in presentation for the current
financial year.
w)
Shire of Three Springs  Long Term Financial Plan  2012-2022
47